The PC-SIG Library 10/The PC-Sig Library - Shareware for the IBM PC and Compatibles (PC-SIG)(Tenth Edition Disks 1-2804)(1991).iso/PC_SIGCD/20/0/DISK2007.ZIP/PATRANS2.HLP

Text File | 1989-03-01 | 14KB | 230 lines

ADD/DELETE PORTFOLIO TRANSACTIONS           RELEASE 2.11           PAGE 1 OF 10

This screen is used to buy and sell securities, or to make corrections to pur-
chases or sales.  You can also process distributions of capital such as stock
splits and mutual fund distributions, and you can specify Federal and State tax
rates (for the active portfolio only).

First, a few definitions.  When you purchase a security, you are said to have
taken a "long" position in that security.  If you borrow money for that pur-
chase, that is known as buying on margin.  If on the other hand you borrow the
security itself, you are said to have taken a "short" position or to have made
a "short" sale, and you will hope to re-purchase that security later at a lower
price.  This re-purchase is referred to as "covering" the short position.  In
either of the above cases, you have an "open" position.  The act of selling a
security you own, or covering a short position, is sometimes referred to as
"closing" that position.

This program cannot handle short sales.  Short sales are more often used by
professional traders than by individuals.  They pose the possibility of limited
gains, but of unlimited losses.  Although this program will handle purchases on
margin, a future version will compute margin and investable funds.


ADD/DELETE PORTFOLIO TRANSACTIONS                                  PAGE 2 OF 10

Notice that the screen was divided into four areas.  From top to bottom these
are the column headings, individual purchases, portfolio summary and menu.  The
column labelled DATE OF SALE OR CURR.PRICE contains the current price per share
(or other unit), if available, for open positions and the date of sale for
closed positions (an open position has no date of sale).  The column labelled
MARKET VALUE contains the current market value (or purchase cost if current
price per unit is not available) for open positions, or sale proceeds if the
position is closed.

The portfolio summary has a line labelled POSITIONS CURRENTLY OPEN. This line
shows the total cost basis, market value and dollar gain or loss in the port-
folio as of the current (DOS system) date.  The line labelled POSITIONS CLOSED
THIS YR. shows the total cost basis, sale proceeds and gain or loss in securi-
ties you sold during the current calendar year. (WARNING: The program gets the
calendar year from the DOS system date).

The lower right-hand corner of the screen shows the name of the portfolio and
how full it is, for example 34/255 means the portfolio contains 34 transactions
out of a maximum of 255.


ADD/DELETE PORTFOLIO TRANSACTIONS                                  PAGE 3 OF 10

On the left side of the screen, in the "symbol" column, one of the ticker
symbols is in a solid video block which is referred to here as the selector
block.  The selector block is used to select an individual position to close
out, delete or make a correction to.  It can be moved up and down by using the
up- and down-arrow keys on the right side of the keyboard; the display will
"scroll" automatically as required. In addition the Home, End, PgUp and PgDn
keys can be used to "browse" through the portfolio transactions; and the left-
and right-arrow keys can be used to select a data item to be corrected.

Aside from moving the selector block and "browsing" through the portfolio, the
available menu choices are explained below.  The portfolio summary is updated
automatically each time you make any changes.

A = Add/Delete Securities.  This function will take you to the Add/Delete
    Securities screen.  Any data you have entered will automatically be saved
    to disk at this time.  A security cannot be bought in any portfolio until
    it has been added to the catalog, with the Add/Delete Securities screen.
    The Add/Delete screen has its own menu and Help screens for more informa-
    tion.  NOTE: Current market prices are entered in the Add/Delete Securities
    screen.

ADD/DELETE PORTFOLIO TRANSACTIONS                                  PAGE 4 OF 10

B = Buy a security (long).  This function is also used to process a cash divi-
    dend re-investment, since the program does not account for actual income
    received.  A dividend re-investment is therefore just like any other pur-
    chase.  The information (number of shares and purchase cost) should come
    from your account statement.

    All purchases are kept in ascending order by type of security (not shown on
    the screen), security identifier (usually the ticker symbol) and the date
    of purchase (or date of account balance for cash equivalent accounts).

    Security types are kept and displayed in the following order: cash & margin
    accounts, commercial paper, "money market", municipal and corporate bonds,
    preferred and common stocks, warrants and options, and precious metals.

    The program first asks you for a ticker symbol, which must already exist in
    the catalog.  If it doesn't exist, use the A function (explained previous-
    ly) to go to the Add/Delete Securities screen and add that security to the
    catalog first.  If there is no official ticker symbol, one must be made up.
    Once a security has been added to the catalog, it can be purchased any num-
    ber of times in any portfolio.

ADD/DELETE PORTFOLIO TRANSACTIONS                                  PAGE 5 OF 10

B = Buy a security (long).  After you enter the ticker symbol you will be asked
    to enter the date of purchase.  The new transaction will then be shown on
    the screen (you can still cancel by pressing Esc).

    Next, enter the number of shares or other units (if applicable).  For bonds
    or T-bills, use the face value in hundreds, for example enter 250 if you
    bought $25,000 face value of municipal bonds. Then you enter the cost basis
    (normally, that is what you actually paid for the security). The cost basis
    should include commission and other expenses.  This information should be
    available from your brokerage firm or mutual fund statement.

    If the security is a cash or margin account or commercial paper, you will
    be asked for the account balance instead of cost basis.  You can have any
    number of account balance entries with different dates for the same account
    and the correct one will be automatically selected on reports according to
    the report date(s).

    If appropriate and it hasn't already been entered, the program will also
    ask for the current price (market value) per share or other unit.  If no
    price is available, market value will be assumed to be equal to cost basis.

ADD/DELETE PORTFOLIO TRANSACTIONS                                  PAGE 6 OF 10

D = Distribution or split.  This function is to apply a stock split, stock div-
    idend or mutual fund distribution.  It is not intended for re-investment of
    cash dividends.  Information about the distribution of income or capital
    (from mutual funds, or sometimes from utility stocks) can be found in the
    corresponding statements which the fund sends, usually each quarter.  They
    should tell you whether it is income or capital and what effect it has on
    your holdings. As a rule, a cash dividend represents interest and dividends
    the fund receives and remits to you, just like interest on a savings ac-
    count. A capital distribution represents profits on the sale of securities.

    The author of this program is not a professional accountant, and you are
    strongly urged to seek the advice of your own accountant or tax advisor
    regarding these matters.  He or she can assist you as to whether a distri-
    bution is capital or income and what the accounting and tax effects are.

    To apply a distribution or split, move the selector bar to any transaction
    in the applicable security and press D.  The security must be a common
    stock or mutual fund.  At least one open position must exist, but the sel-
    ector bar doesn't necessarily have to be on that open position.  Press the
    Esc key any time to terminate the function.

ADD/DELETE PORTFOLIO TRANSACTIONS                                  PAGE 7 OF 10

D = Distribution or split (continued).  A distribution or split can be applied
    using either of the two methods described below.  The program will ask if
    you are applying a (S)tock split or a (D)istribution.  If you answer S the
    first method is used; otherwise the second method is used.  Although nor-
    mally the first method is for stocks and the second is for funds, the end
    result is the same - a ratio is computed and unit price and quantities are
    changed.  Either method can be used for either stocks or funds, depending
    on what information is available at the time.

    To apply a stock split or stock dividend, you enter the appropriate ratio
    as prompted by the program.  For example, to apply a 3-for-2 stock split,
    just type 3 <enter> 2 <enter>.  To apply a 5% stock dividend, type 1.05
    <enter> (the program assumes it's 1.05 to 1).  A "reverse split" is OK
    (a warning message will be flashed) and can be used to "back out" a normal
    split or other distribution.

    For a mutual fund (or utility stock) distribution, you enter the net asset
    value or closing price as of the day BEFORE the distribution; then you
    enter the dollar amount (per share) of the distribution.  The program will
    compute the required ratio.

ADD/DELETE PORTFOLIO TRANSACTIONS                                  PAGE 8 OF 10

D = Distribution or split (continued).  A distribution or split need be applied
    ONLY ONE TIME.  After entering the required parameters, you are prompted to
    verify Yes or No.  A distribution or split will apply to ALL positions in
    the selected stock or fund, in ALL portfolios within the scope of the cata-
    log (normally all portfolios on the current disk or sub-directory).  Thus,
    the number of shares and share prices will be adjusted automatically in ALL
    open and closed positions, not only in this but in other portfolios.

C = Correction or Change. This function is used to correct any data item in the
    selected purchase entry, except the ticker symbol which cannot be changed.
    The program won't allow you to change something that doesn't make sense,
    such as annual income for a call option.  Although you can change current
    prices from this screen, you should update current market prices from the
    Add/Delete Securities screen.  To close a position, see below.

S = Sell the selected purchase (close the open position).  The selector bar
    must reside on an open position.  The security cannot be a cash or margin
    account or commercial paper, as those transactions represent the account
    balance.  Another menu will appear at the bottom of the screen, and it will
    have its own Help function for further explanation.

ADD/DELETE PORTFOLIO TRANSACTIONS                                  PAGE 9 OF 10

W = Wipe out (delete) the selected position.  You can delete any transaction
    regardless of whether it is open or closed.  It is better to close a posi-
    tion and leave it in the system for at least a year, rather than to simply
    delete an open position when a security is sold.  This is to allow correct
    comparison of portfolio status from one date to another later date, and to
    provide information on closed positions (gains/losses) for tax purposes.

    The (W)ipe out function is mainly intended for purging a portfolio of the
    oldest positions that have been closed out, especially if the portfolio is
    full.  It is also handy when breaking up a portfolio into two parts (you
    would of course make a copy first, using the DOS COPY command, and add it
    to the Portfolio Analyzer diskette or sub-directory under a different name,
    such as PERSON87 AND PERSON88).

T = Tax rates.  This function is to specify the Federal and State incremental
    tax rates for this portfolio.  Each portfolio can have its own tax rates.
    The tax rates are used in computing the after-tax return on a security.




ADD/DELETE PORTFOLIO TRANSACTIONS                                 PAGE 10 OF 10

T = Tax rates (continued).  Tax RATES are not to be confused with TAXABILITY,
    which is specified in the Add/Delete Securities screen.  Taxability simply
    tells whether or not the income from a security is taxable on Federal and/
    or State income tax returns, but doesn't tell the tax RATE.  Income from a
    security can be taxed at different rates in different portfolios, and one
    or both of the rates can be zero or non-zero.

    The incremental tax rate is the amount of tax to be paid on the last dol-
    lar of income.  Because tax rates are graduated (one pays higher tax rates
    on higher amounts of income), the incremental rate, sometimes known as the
    "tax bracket", is better to use for analysis than an average rate.

    After pressing T, the program will show you the current tax rates and ask
    is they are OK.  If not, you can replace them with new rates which are
    entered as percentages.  Press Esc to cancel the function with no change.

H = Help - displays the information you are reading now.

X = eXit back to the Master Menu.  All data you have entered is saved on disk
    at this time.