how are securities traded
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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)
Stocks offered to public, road shows, book building and prospectus
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
When there is more activities in the market, the bid/ask spread is…
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
A market order instructs dealers to…
buy or sell a stock immediately at the prevailing market price
expires at the close of the trading day.
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
the initial margin is what you …(1- initial margin) is what you…
formula for buy on margin
maint. Margin * sell price * Q = proceedings – borrowed amount
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
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
The secondary market consists of transactions on the…
organized exchanges and in the OTC market
The use of the Internet to trade and underwrite securities …underwriting costs for a new security issue.
regarding private placements of primary security offerings, the shares are sold directly to ..
a small group of institutional or wealthy investors.
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
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