Cfa Level 1 Stock V.2

Front 1

4 charactors of well-functioning securities market

Back 1

1.Timely and accurate information
2.Liquidity
3.Internal efficiency-low transcation costs
4.Informational (external) efficiency-prices adjust rapidly to new information

Front 2

Negociated sale

Back 2

price of underwriting and advisory services is agreed upon through negotiations b/t issuer and ibanker.

Front 3

competitive bid process

Back 3

securities to be issued by bids of ibanks.It is usually used in the issuance of municipal bonds.

Front 4

3 main service provided by underwriter

Back 4

1.Origination-design, planning and registration of the issue
2.Risk bearing-guarantees the price by purchasing the securities
3.Distribution-sale of the issue

Front 5

Third market

Back 5

OTC markets that trade stocks that registered in exchange

Front 6

Fourth Market

Back 6

direct exchange of securities b/w investors without using the service of a broker as an intermediary.

Front 7

specialist

Back 7

people that controls the limit order books, posts bid and ask prices, and trades for his own account

Front 8

commision broker

Back 8

executes customer trades for a brokerage firm

Front 9

Floor brokers

Back 9

act as freelance brokers for other commission brokers

Front 10

registered traders

Back 10

people who trade for their own accounts

Front 11

Market makers

Back 11

Specialists on the U.S exchange

Front 12

basic functions of Market makers

Back 12

1.act as brokers handling the limit order book, where limit and stop orders are maintained
2.act as dealers by buying and selling stocks for their own account to maintain an orderly market and provide liquidity to the market if there is an inadequate order flow

Front 13

Growth company

Back 13

companies that constantly have profitable projects that exceed their required rate of return

Front 14

Growth stock

Back 14

stock that earns higher return other than others that have same risk

Front 15

defensive company

Back 15

companies that are less sensitive to the economy downside

Front 16

defensive stock

Back 16

stock that will not decline as much as the market when the market decline

Front 17

cyclical company

Back 17

company that has earning trend attract to business cycle

Front 18

cyclical stock

Back 18

stock that move greater than the market, which imply a bigger beta value

Front 19

speculative company

Back 19

company that has risky asset, such as diamond and oil, that can turn to very large profit

Front 20

speculative stock

Back 20

stock that is likely to have very low or even negative returns because it is often overpriced