Secondary Markets

Question 1

_____________ are the markets in which stocks, once issued, are traded among investors

Answer 1

Secondary stock markets

Question 2

_______ was the first truly global stock market

Answer 2

NYSE

Question 3

The ______ is where trading occurs at a specific place on the floor of the exchange called a trading post

Answer 3

NYSE

Question 4

Each stock has a special market maker called a _________ that maintains liquidity for the stock at all times

Answer 4

specialist

Question 5

What are the three types of transactions occur at trading posts?

Answer 5

Limit order, market order, and specialist transacting for their own account

Question 6

_________ is the simultaneous buying and selling of a portfolio of at least 15 different stocks valued at more than $1 million using computer programs to initiate the trades

Answer 6

Program trading

Question 7

What is the biggest stock market in the US?

Answer 7

NYSE

Question 8

__________ give investors time to make informed choices during periods of high market volatility

Answer 8

Circuit breakers

Question 9

What are the NYSE stringent listing requirements for firms?

Answer 9

Minimum # shares outstanding (liquidity)
Minimum CF, earnings, & revenue
Minimum share price = $1
Minimum market capitalization of firm $40M

Question 10

The _____ has about 3,200 firms listed

Answer 10

NYSE

Question 11

The ______ accounts for 80% of total U.S. organized exchange volume

Answer 11

NYSE

Question 12

________ is the world’s first electronic market and has no physical trading floor

Answer 12

NASDAQ

Question 13

________ provides continuous trading for the most active stocks traded over the counter (OTC)

Answer 13

NASDAQ

Question 14

A _____________ provides automatic order execution for orders of less than or equal to 1,000 shares

Answer 14

small order execution system (SOES)

Question 15

The NASD maintains an electronic _________ and “pink sheets” for small firms that are not part of the NASDAQ

Answer 15

“OTC bulletin board”

Question 16

In ________, traders are allowed to see incoming buy or sell orders milliseconds earlier than general market traders

Answer 16

Flash trading

Question 17

________ then use computerized statistical analysis to generate high frequency trading strategies that are executed by computer as well

Answer 17

Flash traders

Question 18

What is a pro of flash trading?

Answer 18

Flash trading creates more liquidity and the possibility of price improvement

Question 19

What is a con of flash trading?

Answer 19

Creates a disadvantage for regular traders and investors who are not allowed to view incoming orders and high volume of trading generated by multiple computers can lead to events like the so called flash crash

Question 20

On May 6, 2010, the financial markets experienced the ________

Answer 20

“flash crash”

Question 21

__________ occurs when brokers and exchanges allow some traders to engage in high frequency trades anonymously using the broker’s access code

Answer 21

Naked access

Question 22

__________ are trades that occur on alternative trading platforms (such as electronic communication networks) that do not report the details of the trade on order books

Answer 22

Dark Pools