Chapter 2 Flashcards
Securities markets
where stocks bonds and other securities trade
Makes it easier for investors to buy and sell due to speed and level price
Securities
Investment certificates that represent equity or debt in a company
Individual investors
People investing their own bread to make more
Institutional investors
People paid to manage others money in the market (lot of it)
What is a Public Company?
Companies must be public if they register with SEC, sell securities (usually though IPO), or allow investor base to reach a certain size
Public companies gotta keep shareholders in the know through different reports
Annual 10-K Form
Audited and discloses financial statements and describes business results
Quarterly 10-Q Form
Unaudited and describes YTD and comparisons to previous years
Current 8-K Form
Major events disclosed
Proxy Statements-
Describes matters that gotta be voted on in shareholder meetings (like BOD change, executive compensation, and proposed margins)
Primary market
where new securities are sold to the public through investment bankers
Issuer gets the $$
Only sold once
Secondary market
old securities are bought & sold
Most are here’
Sold through dealers, brokers, exchanges
Investment specialists play a large role
nvestment banker- help companies raise long-term financing
Use underwriting to buy securities directly from corporations and ressling to public
Stockbroker- someone who buys and sells securities for clients
Paid commissions for transactions and are useful due to understanding of goals
Broker markets
made up of national and sectional exchanges that bring buyers and sellers together through a trading floor
Make up 60% of $ volume in US trading shares
Most common is NY Stock Exchange
Dealer markets
no trading floor and instead use phone networks to link dealers
Not direct trades, but use market makers who then sell to others
Investor->Dealer/Another dealer->Buyer
Largest dealer market is NASDAQ
Mutual Funds-
user buys shares in a portfolio of stocks in which others also contribute to
Less risk
Managed
High ROI
