Chapter 19 Flashcards
The first public offering of a corporation’s stock
Initial Public Offering (IPO)
Specialists who asset in the issue and sale of new securities
Investment Bankers
Large organizations such as pension funds, mutual funds, and insurance companies- that invest their own funds or the finds of others
Institutional Investors
An organization whose members can buy and sell (exchange) securities for companies and individual investors
Stock Exchange
Exchange that provides a means to trade stocks not listed on the nation exchange
Over-The-Counter (OTC) Market Exchange
A nationwide electronic system that links dealers across the nation so that they can buy and sell securities electronically
NASDAQ
The federal agency that has responsibility for regulating the various stock exchanges
Securities and Exchange Commission (SEC)
A condensed version of economic and financial information that a company must file with the SEC before issuing stock; must be sent to prospective investors
Prospectus
Shares of ownership in a company
Stocks
Evidence of stock ownership that pacifies the name of the company, the number of shares it represents, and the type of stock being issued
Stock Certificate
Part of a firm’s profit that the firm may distribute to stockholders as either cash payments or additional shares of stock
Dividends
The most basic form of ownership in a firm, it confers voting right and the right to share in the firm’s profits through dividends, if approved by the firm’s board of directors
Common Stock
Stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold
Preferred Stock
A corporate certificate indicating that a person has lent money to a firm (or a government)
Bond
The exact date the issuer of a bond must pay the principal to the bondholder
Maturity Date
The payment the issuer of the bond makes to the bondholders for use of the borrowed money
Interest
Bonds that are unsecured (i.e. not backed by any collated such as equipment)
Debenture Bonds
A reserve account in which the issuer of a bond periodically retires some part of the bond principal prior to maturity so that enough capital will be accumulated by the maturity date to pay off the bond
Sinking Fund
A registered representative who works as a market intermediary to buy and sell securities for clients
Stockbroker
Buying several different investment alternatives to spread the risk of investing
Diversification
The positive difference between the purchase price of a stock and its sale price
Capital gains
An action by a company that gives stockholders two or more shares of stock for each one they own
Stock Splits
Purchasing stocks by borrowing some of the purchase cost from the brokerage firm
Buying Stock on Margin
High-risk, high-interest bonds
Junk Bonds
An organization that buys stocks and bonds and then sells shares in those securities to the public
Mutual Fund
Collections of stocks, bonds, and other investments that are traded on exchanges but are traded more like individual stocks than like mutual funds
Exchange-Traded Funds (ETFs)
The average cost of 30 selected industrial stocks, used to give an indication of the direction (up or down) of the stock market over time
Dow Jones Industrial Average (the Dow)
Giving instructions to computers to automatically sell if the price of a stock dips to a certain point to avoid potential losses
Program Trading
