Chapter 3 - Securities Markets Flashcards
____ is preliminary registration with SEC
Red Herring
_____ is when private firm wants more funds, and sells direct to small group of institutional or wealthy investor.
Private Placement
What is i called when IB makes a firm commitment on proceeds to issuing firm and where the underwriter assumes the risk?
Underwritten
What’s it called when IB makes NO firm commitment and the issuing firm bears the risk?
Best Efforts
_____ is the ability to trade an asset at a fair price on a short notice
Liquidity
first sale/issue of stock to the general public?
Initial Public Offering (IPO)
_____ is the sale of additional stock of a firm that’s already publicly traded
Seasoned Equity Offering or seasoned new issue
_____ buys securities from issuing company and resells them to the public
Underwriters
What is it called when a firm’s registration statement to the SEC is in final form and approved? It describes the firm and securities that are being issued.
Prospectus
issuing stock has 4 levels in what is known a “underwriting syndicate”. what are they?
- Issuing Firm (at top)
- Lead Underwriting (next)
- IB A, IB b, IB c, IB d,…
- Private (or should say individual) investors
what SEC rule allows firms to register securities and gradually sell them to the public for two years following initial registration? allows to be sold on short notice with little added paperwork, small amounts, and little flotation costs? Literally “on the shelf or ‘shelf registration’”
Rule 415
what are the 4 types of secondary financial markets?
- Direct Search
- Brokered
- Dealer
- Auction
Example such as Craigslist, where buyers and sellers must seek out each other directly is called?
Direct Search Market
Offers search services to buyers and seller in an active market?
Brokered Market
traders specializing in particular assets buy and sell for their own accounts. middle man that one can either buy or sell to the dealer (NASDAQ for example)
Dealer Market
traders converge at one place to buy or sell and asset to one another. (NYSE for example)
Auction Market
what are the 3 types of orders?
- Market
- Limit (price-contingent orders)
- Stop Loss
____ is when stock is to be sold if price falls below stipulated level
Stop-loss order
_____is when stock should be bought if price rises above stipulated limit.
Stop-buy orders
_____ are sales of securities one does NOT own but borrowed from a broker.
Short Sales
_____ is the time it takes to accept, process, and deliver a trading order
Latency
_____ are trading venues that preserve anonymity but also affect market liquidity
Dark Pools
_____ in the account is the portion of the purchase price contribution by the investor; the remainder is borrowed from the broker.
Margin (buying on the margin)
____ is where a short-seller must purchase a share of the same stock in order to replace the share that was borrowed from the broker.
Covering the Short Position
the major governing legislation on securities trading are _____ and ______.
Securities Act of 1933; Securities Exchange Act of 1934
