Lecture 2 Flashcards

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1
Q

4 types of markets:

A
  1. Quote Market
  2. Order Market
  3. Broker Market
  4. Hybrid Market (order with some quote)
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2
Q

In pure quote-driven markets, public traders cannot arrange trades among themselves, true or false

A

true

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3
Q

In pure quote-driven markets; who supplies the liquidity?

A

The dealer

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4
Q

In pure quote-driven markets what prices does the dealer quote?

A

their bid and ask prices

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5
Q

An order driven market is an auction market, true or false?

A

true

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6
Q

An order driven market where do trader issue all their orders too?

A

The exchange

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7
Q

Does an order driven market have a dealer?

A

No

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8
Q

What is the center of an order driven market?

A

The Trading Rules

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9
Q

A brokered market is where whom arranges trades?

A

Broker

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10
Q

In brokered markets who initiates the trade?

A

The sellers who contact the broker

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11
Q

What role does the broker have in brokered markets?

A

To find counterparties

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12
Q

What items are sold in brokered markets?

A

item that is unique

2. or items in a time of low liquidity and dealers are unwilling to hold inventories

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13
Q

What is a hybrid market?

A

mix of both quote-driven markets and order driven markets

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14
Q

what are the most common hybrid market?

A

those with dealer-specialists

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15
Q

What market is hybrid markets and who operates in them?

A

order-driven markets in which the specialist must provide liquidity under some circumstances

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16
Q

In the 4 market types how are intentions conveyed and displayed?

A

Information systems bring information into and out of the market.

17
Q

List the 4 Information systems that bring information into and out of the market:

A
  • Information Collection Systems
  • Information Distribution Systems
  • Order Routing Systems
  • Order Presentation Systems
18
Q

Transparent markets report complete information to the public quickly. what 2 kinds of transparency are there:

A
  • Ex ante transparent

* Ex post transparent

19
Q

what is Ex ante transparent?

A

before trading you can see the intentions of all traders and all orders

20
Q

what is Ex post transparent?

A

a market that will quickly report all trades to the public shortly after they have happened

21
Q

ASX resolves the opening price using a set of rules –

A

Principle 1– maximize the volume
Principle 2 – Establishing the minimum surplus
Principle 3 – Ascertaining where the market pressure exists
Principle 4 – Consulting the reference price