Stock Exhanges Flashcards
What is the Stock Exchange?
It is a financial market where savers and lenders meet, thus contributing to the growth of an economy since this is a means of channeling savings towards productive investments.
What are the two most important characteristics of the Stock Exchange?
It provides the possibility of transforming securities into cash whenever (liquidity) and the free establishment of price under transparent conditions?
What are the instruments used for the financing companies?
Shares, these are certificates of ownership that represent one of the equally divided parts in the capital of a company
What are the different values of a share?
Nominal, market, book, liquidation, and intrinsic. The most important is the market and intrinsic value.
When you purchase share what rights can you acquire?
Voting rights, dividends, transfer, and subscription.
What is an IPO?
A initial public offering is the first time a company offers its shares to the public, it bring advantages such as a new type of financing or prestige, but disadvantages such as increased direct costs, requirements of constant information and the possibilities of underpricing.
What is the spanish secondary market?
The SIBE (spanish stock market interconnection system)
What are the key characteristics of the SIBE?
Single price in each security, continous trasing, opening and closing auctions, trade is made in euros, the orders are placed according to the criteria of pricr and when they were placed
What are the types of order included in the Secundary Market?
The Market orders, the Stop Limit Order or Best Price Order, the Limit Order or the Hidden volume orders
What is the characterisitcs of a LO?
The order is executed at the price limite or one higher or lower found in the order side of the order.
What is a BPO?
Orders limited to the best bid, and if there is no order it is rejected
What are the conditions for execution of order in the secunday market?
Execute or cancel, minimun volume, fill or kill
In general secondary market orders can be…
Modifies, cancelled, and can include maturity of orders
What is the suspended market?
Market phase when orders are placed but not carried out
There are three different types of suspended auctions
Opening auction (order book is partially visible, you can see equilibium price, it helps avoid price manipulatio), closing auction (sessions ends with 5 minute auction, being the price the closing session price), and volatility auction (occur when a static or dynamic range is broken, with the aim of correcting the rise and fall)
