Words and Theories from old Exams

Question 1

Limit order

Answer 1

An order placed by a customer to buy
stock that specifies a maximum price or an order
to sell stock that places a minimum acceptable
price.

Question 2

Maintenance margin

Answer 2

The maintenance margin is the amount of money a trader must have on deposit in their account to continue holding their position, which is typically 50% to 75% of the initial margin.

Question 3

Fundamental analysis

Question 4

Principal agent problem

Question 5

Short selling

Question 6

securization

Question 7

Liquidity management

Question 8

Efficient market hypothesis

Question 9

The gordon growth model

Answer 9

The Gordon growth model values a company’s stock using an assumption of constant growth in dividend payments that a company makes to its common equity shareholders. The GGM assumes that a company exists forever and pays dividends per share that increase at a constant rate.

Question 10

Open market repurchase agremeents