FIN 310 CH 12

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FIN 310 CH 12
2015-10-26 20:00:51

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  1. What are two major types of securities?
    Stocks and Bonds
  2. When stocks or bonds are sold for the first time...
    an Investment Banker is hired to find investors that want to purchase them. Also to help with the pricing at which it will be desirable to investors.
  3. New securities are sold in the...
    Primary market to new investors, but later between investors in the Secondary markets.
  4. When a stock is sold for the first time, it is called an...
    “IPO” which stands for Initial Public Offering.
  5. When a new security is sold, investors must...
    be given a prospectus that describes the securities details.
  6. The Nasdaq stock market is sometimes referred to as...
    the Over-the-counter market.
  7. Bid / Ask Spread?
    The bid price is what you’d receive if you sold a stock, and the ask price is what you’d pay if you bought it.
  8. ADRs are foreign stock shares traded in...
    the US standing for American Depository receipts.
  9. Churning
    Is when a stock broker enters buy or sell orders into your account solely to generate commissions for themselves and it’s illegal!
  10. Securities and Exchange Commission (SEC)
    Regulates the stock and bond markets as well as the major stock exchanges.
  11. Specialist on NYSE, and Market Makers on Nasdaq?
    The Nasdaq stock market is a distributed network which will have generally at least 3 traders willing to buy or sell you stock in a particular company, whereas if the stock trades on the New York Stock Exchange there will be just one specialist that will handle all of the trades for that company.
  12. Round Lot vs Odd Lot?
    Stocks usually trade in increments of 100 shares called a round lot. If a stock order is less than 100 shares, it’s called an odd lot.
  13. Market orders vs Limit orders?
    A market order is transacted immediately at the best price available, whereas a limit order is dependent upon the price being the same or better than the limit placed.
  14. Short Selling means to...
    sell stock you borrow from your broker in the hope that you can replace it with the same stock after the price goes down.
  15. Margin is the amount of...
    your own money you put down on a stock purchase. The minimum is 50%.
  16. A margin call is when...
    the amount you have paid to purchase the stock drops below the minimum margin requirement usually 25% of the stock’s current price, then you will get a margin call and be asked to deposit enough money to bring your funds paid up to 50% of the current price.
  17. SIPC acts similar to FDIC insurance at bank but..
    for Stock Brokerages. Because of SIPC, investments on deposit in US stock brokerages are covered/protected up to a minimum of $500,000 in case the brokerage files bankruptcy.
  18. Book Value
    Stock holder's equity
  19. Bull Market
    rising prices
  20. Bear Market
    Falling prices