how are securities traded

The flashcards below were created by user yhliuaa on FreezingBlue Flashcards.

  1. Why new issues are Underpriced why they underperform in the long-term? they tend to issue during …markets

    • 1.  To reward client for revealing their intentions on allocation.
    • 2.  To compensate for the risk that is a new company, unknown to the market.
    • 3.  To make the underwriting process a success.(and retain the reputation of underwriter)
    • hot

  2. IPO process

    Stocks offered to public, road shows, book building and prospectus

  3. There are 4 types of markets:…examples of brokered markets include…examples of dealer markets includes…

    • ¨  Direct search, Brokered, Dealer, Exchanges:
    • -- Real estate market ¤  Primary market (IB) ¤  Block Trades (hedge funds)
    • -- Over the count trades (OTC) ¤  Banks

  4. When there is more activities in the market, the bid/ask spread is…


  5. Why is it hard to put derivatives into exchanges?

    • Exchanges are very standardized, highly regulated and liquid
    • Investors would need to put in collaterals and this holds up money

  6. Limit buy order

    Buy if below

  7. Limit sell order

    Sell if above

  8. Stop buy order

    Buy if above

  9. Stop sell order

    Sell if below

  10. A market order instructs dealers to…

    buy or sell a stock immediately at the prevailing market price

  11. A day order …

    expires at the close of the trading day.

  12. The cost of buying and selling a stock may consists of __________.

    • • broker's commissions
    • • dealer's bid-asked spread
    • • a price concession an investor may be forced to make

  13. the initial margin is what you …(1- initial margin) is what you…

    pay; borrow

  14. formula for buy on margin

    maint. Margin * sell price * Q = proceedings – borrowed amount

  15. Funds from the sale of new issues flow to the issuing corporation, making this a …market transaction. Investment bankers usually assist by… The investment banker is involved in the …in the primary market. In a typical underwriting arrangement the investment banking firm sells shares to the public via an…; they assumes the full risk that….

    • primary; pricing the issue and finding buyers.
    • placement of new issues
    • underwriting syndicate
    • the shares may not be sold at the offering price

  16. Specialists maintain a book listing…; they earn income from …Specialists stand ready to trade at….. Specialists are both …and provide …to the market; they are not...

    • outstanding unexecuted limit orders
    • commissions and spreads in stock prices; quoted bid and ask prices
    • brokers and dealers; liquidity; analysts

  17. The secondary market consists of transactions on the…

    organized exchanges and in the OTC market

  18. The use of the Internet to trade and underwrite securities …underwriting costs for a new security issue.


  19. regarding private placements of primary security offerings, the shares are sold directly to ..

    a small group of institutional or wealthy investors.

  20. Short sellers take ….risk(no one sell), short selling is an indicator that the stock price is .. it is …on the price thus stabilizes the market. …are kept from the broker as to hedge if the stock price goes UP.
    Short covering; overpriced; correctional

    The cash proceed from the sell + margin collateral
Card Set:
how are securities traded
2014-10-05 15:26:44
how are securities traded

how are securities traded
Show Answers: