SiegelCh15

SiegelCh15 - Financial Markets Siegel, Ch. 15 Spiders,...

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Financial Markets Siegel, Ch. 15 Spiders, Cubes, Futures, And Options The stock that traded the largest dollar volume in the US in 2001 was the NASDAQ 100 Index Tracking Stock, and ETF. This is the CUBES fund, an ETF that gives you a cheap and efficient way to buy or sell a diversified portfolio of technology stocks. Exchange Trades Funds A lot of ETFs have nicknames. ETFs are portfolios of securities that trade like individual stocks. The first one was Standard and Poor’s (S&P) depositary Receipts (SPDRs), aka Spiders . They mimic the 500 stocks in the S&P 500, they are designed to match the performance of the index. Also: “diamonds ” (DIA) tracks DJIA. ETFs track stocks very closely because ETFs can be exchanged for stocks, as long as the value of the transaction is large enough. creation unit, 50,000 shares. Advantages of ETFs over mutual index funds: Can be sold anytime during the day. They can be shorted. Tax efficient, hardly any capital gains when other investors withdraw. Stock Index Futures “Shifts in overall economic sentiment first affect the index futures market in Chicago and then are transmitted to stocks trades in New York.” In 1992, a disruption in futures trading caused the stock exchange in NY to remain flat and unvolatile. The Impact of Index Futures
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SiegelCh15 - Financial Markets Siegel, Ch. 15 Spiders,...

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