Terminology

Question 1

Private placement

Answer 1

nonpublic sale of securities

Question 2

Venture capitalist

Answer 2

firm specializing in investing in securities, especially stocks of emerging companies

Question 3

Investment banker

Answer 3

middleman who sells company’s securities to public

Question 4

Underwriting

Answer 4

company sells security to investment banker who in turn sells to public

Question 5

Preliminary Prospectus

Answer 5

initial document describing condition of firm issuing new security

Question 6

Over-the-Counter

Answer 6

market for unlisted securities not on NYSE, Amex (NASDAQ)

Question 7

Round lot

Answer 7

Normal unit of trading (100 usually)

Question 8

Odd lot

Answer 8

Unit of trading less than round lot (<100)

Question 9

Spread

Answer 9

Difference between bid and ask prices

Question 10

Market order

Answer 10

Order to buy or sell at current price

Question 11

Limit order

Answer 11

order to buy when stock reaches certain price

Question 12

Margin

Answer 12

process by which broker loans part of required finds to investor

Question 13

Street name

Answer 13

Leaving security in broker’s name rather than client’s

Question 14

Discount broker

Answer 14

lower commissions (flat) but fewer services