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78 Cards in this Set

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  • Back
The process of purchasing newly issued shares from the issuer and reselling those shares to the general public
underwriting
A firm that specializes in arranging financing for companies
investment banking firm
When a company offers stk for sale to the public for the 1st time
initial public offering IPO
The mkt in which previously issued securities trade among investors.
Ex: Placing order with your broker to purchase outstanding stocks
Secondary market
The mkt in which new securites are sold to investors
Primary market
The financing provided for new ventures that are frequently high-risk investments is reffered to as "Venture ......."
Capital
The sale of additional shares of stock by a company whose shares are already publicly traded
Seasoned equity offering
Under the provisions of a general cash offer, shares of stock are offered to:
The general public on a "first-come" basis
A public issue of securities in which securities are first offered to existing shareholders
rights offer
The difference between the price an underwriter pays an issuer and the underwriter's offering price is called the
Spread
When a group of underwriters form together to share the risk and to help sell an issue
Syndicate
The type of underwriting in which the underwriter buys the entire issue, assuming full financial responsibility for any unsold shares
firm commitment underwriting
The type of underwriting in which the underwriter sells as much of the issue as possible, but can return any unsold shares to the issuer without financial responsibility
Best efforts underwriting
The type of underwriting in wich the offer price is set based on competitive bidding by investors.
Dutch auction underwriting
Which one of the following is the federal agency which regulates the financial markets in the U.S.?
Securities and Exchange Commission
The document that must be prepared in order to receive approval for a stock offering is called a
Prospectus, detailing a company;s financial postion, its operations, and investment plans for the future
A preliminary prospectus not yet approved by SEC/ domcument provided to investors who are interested in stock offering
Red herring
Securities Dealer
trader who buys and sells from his or her inventory
Broker
intermediary who arranges trades between a buyer and a seller
Which one of the following prices will an individual investor receive if he or she sells shares of Microsoft?
Bid
The price a dealer is willing to pay
Bid price
Which one of the following prices will an investor pay to purchase shares of stock that are currently outstanding?
Ask price
The profit a dealer makes on a purchase and resale of shares of stock is called the
Spread
A private Equity Fund
- Is set up as a limited partnership
- Usually use a 20/20 fee structure
- Typically have a stated life of 7-10 years
Which of the following is correct regarding the compensation paid to private equity fund managers?
Management compensation is usually subject to a "clawback" provision to limit the performance fees.
An owner of a trading license on the NYSE is called a
Member
An NYSE Supplemental Liquidity Provider:
- Can trade the same stocks as designated market makers
- Can trade only from offices outside the exchange
-Must quote bid or ask quotes a certain % of the day
The party who serves as a dealer for a few securities on an exchange floor and is obligated to maintain an orderly market for those securities is called a:
Designated market maker
A trading floor broker
executes orders on behalf of commission brokers in exchange for a fee.
The NYSE Super Display Book is an electronic system which:
is based on NYSE's ARCA electronic trading engine.
A NYSE member who trades only for his or her own account is called a(n):
floor trader
The location on an exchange floor where a particular security trades is called a(n):
Specialist's post
You want to sell shares of stock at the current price. Which type of order should you place?
Market order
An order to buy shares of stock at a stated price or less is called a _____ order.
Limit
An order to sell that involves a preset trigger point is called a _____ order.
Stop
A market centered on dealers buying and selling for their own inventories is called a(n):
OTC market
Which of the following describes and ECN (Electronic Communications Network)
Web site used by investors to trade directly with other investors
Inside quotes are the:
highest bid and lowest asked quotes offered by securities dealers.
The off-exchange market in which exchange-listed securities trade is referred to as the _____ market.
Third market
The market where individual investors directly trade exchange-listed securities with other individual investors is referred to as the _____ market.
Fourth market
a stock market index in which stocks are held in proportion to their share price?
Price-weighted
When stocks are held in an index in proportion to their total company market value, the index is
Value-weighted
An index is valued on a daily basis. However, some stocks in this particular index have not traded recently. As a result, this index suffers from index:
Staleness
Which one of the following statements concerning the NYSE is correct?
The NYSE is part of a firm that also operates a stock exchange in Amsterdam.
Which of the following are common sources of venture capital
- Private Individuals
- University endowment funds
- Insurance companies
Wich of the following statements is correct concerning Venture Capital
Venture Capital is frequently provided in stages with each stage financed by different venture capitalists
How long is the "lock-up" period that is commonly found in an IPO underwriting contract?
Six months
Which one of the following can be assumed when the SEC approves an IPO registration?
All rules have been followed to allow for full disclosure of info
Which one of the following transactions occurs in the primary market?
Sale of newly issued shares by the issuer to a shareholder
Trevor currently owns 545,000 shares of ABC stock. He will sell those shares for $17.10 a share. He is also willing to purchase additional shares for $17.07 a share. Trevor is a securities:
Dealer
Anna is an individual investor. She purchases shares at the _____ price and sells at the _____ price.
asked;bid
What is current structure of NYSE
Publicly traded corporation
In 2007 NYSE Holdings merged with which one of the following?
Euronext, N.V.
In order to currently trade on the floor of the NYSE, members must:
Purchase a trading license
Which one of the following has the greatest duty to provide liquidity to the financial market?
Designated Market Maker
The SuperDOT system has lessened the role of which of the following?
floor BROKERS
Which one of the following statements related to the NYSE Hybrid market is correct?
Floor brokers operate both electronically and in person
To be listed on the NYSE, a firm must ahve at least:
pre-tax aggregate earning of $10 million in the previous 3 years
Lucas wants to sell 9,000 shares of stock and places a market order. The floor broker is unable to arrange the sale with another floor broker so the specialist agrees to "stop" the stock. What has the specialist agreed to do?
Purchase the shares if no other buyer is readily available
The duties of a specialist include:
- maintain an order market
- provide liquidity to the market
Faith placed an order to sell 7,500 shares of stock she currently owned. As soon as the order reached the trading floor, the shares were immediately sold. Which type of order did Faith place?
Market order
Steve placed a limit order to sell 500 shares of stock at $14 a share. Which of the following does Steve know for sure?
- His order may never execute
-He could receive more, but not less, than $14 a share
Kelly wants to sell 600 shares of DeLux stock at the going market price after the stock reaches $42 a share. Which type of order should she place?
stop order
After the trigger point is reached, a stop-loss order will be executed at the
market price
Which one of the following orders is frequently used as a means to limit losses resulting from a short sale?
stop-buy
Marcus just placed a stop limit order to sell 100 shares at $21 stop, $18 limit. Which one of the following statements is correct concerning this order if the current market price is $16?
The order will become a limit order to sell at $18 once the market price reaches $21.
Which one of the following statements is correct regarding the NYSE uptick rule?
The rule prevents short-selling except following an uptick.
NASDAQ dealers post which one of the following in addition to their bid and ask prices?
number of shares they will commit to buy or sell
NASDAQ has which of the following characteristics?
- computer network
- multiple market makers
Which one of the following statements concerning NASDAQ is correct?
There are more companies listed on NASDAQ than on NYSE
The orders displayed on NASDAQ are placed by:
Both market makers and individulas on ECNs
Stocks which are listed on the NYSE can:
also be listed on NASDAQ.
The stocks listed on the Pink Sheets:
do not have to file financial statements with the SEC
Which of the following are common characteristic of the OTCBB market?
- low stock prices
- high percentage price changes
- thinly traded securities
The DJIA is an index of the stock prices of _____ firms.
30
Stock market indexes:
vary in the type of stocks included.
Which one of the following is the primary flaw of a price-weighted index?
The effect a company has on the index is dependent solely on the price per share
Which one of the following statements related to stock indexes is correct?
the S&P 500 is value-weighted