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20 Cards in this Set

  • Front
  • Back
4 charactors of well-functioning securities market
1.Timely and accurate information
2.Liquidity
3.Internal efficiency-low transcation costs
4.Informational (external) efficiency-prices adjust rapidly to new information
Negociated sale
price of underwriting and advisory services is agreed upon through negotiations b/t issuer and ibanker.
competitive bid process
securities to be issued by bids of ibanks.It is usually used in the issuance of municipal bonds.
3 main service provided by underwriter
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
Third market
OTC markets that trade stocks that registered in exchange
Fourth Market
direct exchange of securities b/w investors without using the service of a broker as an intermediary.
specialist
people that controls the limit order books, posts bid and ask prices, and trades for his own account
commision broker
executes customer trades for a brokerage firm
Floor brokers
act as freelance brokers for other commission brokers
registered traders
people who trade for their own accounts
Market makers
Specialists on the U.S exchange
basic functions of Market makers
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
Growth company
companies that constantly have profitable projects that exceed their required rate of return
Growth stock
stock that earns higher return other than others that have same risk
defensive company
companies that are less sensitive to the economy downside
defensive stock
stock that will not decline as much as the market when the market decline
cyclical company
company that has earning trend attract to business cycle
cyclical stock
stock that move greater than the market, which imply a bigger beta value
speculative company
company that has risky asset, such as diamond and oil, that can turn to very large profit
speculative stock
stock that is likely to have very low or even negative returns because it is often overpriced