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Definition
investment instrument other than insurance policy or fixed annuity, issued by a corporation, gov. or other oganization which offers evidence of debt of equity
(bonds, mutual funds, stocks) |
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market for new security issues (first)
security is purchased directly from issuer (corp)
2 forms: IPO and seasoned new issues |
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| initial public offering (IPO) |
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| first time the company's stock is traded publicly |
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| new shares being issued by a company that is already publicly traded |
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| corporation will hire an investment bank to facilitate the sale of its shares to the public |
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Definition
trade previously owned shares of stock
organized exchanges and an over the counter market |
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facilitate trade between investors
physical location
NYSE (over 3000 companies)
AMEX (780)
regional |
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Definition
"the Big Board"
200 years old; 1792
2.6 mil is highest seat price
Requirements: 2.5 mil profitability; $40 mil net assets, $40 mil publicly held stock; 1.1 mil held shares |
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computer network of dealers used to execute trades
NASDAQ
35,000 companies traded |
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NO secondary bond market
investors work through a broker |
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| How Securities are Traded |
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Definition
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| exchange member who oversees trading in one or more |
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someone licensed to buy or sell stock for others
broker sends order to SEC, supplies client with price
buyer pays and broker transfer the title of stock to client |
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broker authorized to make trades for you
use caution |
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| good until end of trading day |
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Definition
| good until filled or cancelled |
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| must be filled or canceled immediately |
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| an order to sell or buy a specific number of shares at the best available price |
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| order to sell or buy shares at a certain price or better |
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| stop (or stop-loss) orders |
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Definition
| an order to sell a specific number of shares if the stock falls below a certain price or buy if the stock rises above a certain price |
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Definition
sell high and buy low
do when market is expected to drop |
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