FinancialMarketsChap18

FinancialMarketsChap18 - Financial Markets Chapter 18...

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Financial Markets Chapter 18 Common Stock Markets in the United States Key Terms: Abnormal returns, 347- That portion of a security’s returns that is above (positive) or below (negative) what one would expect from market movements and the risk class of the security. Alternative Trading Systems (ATS), 330- Mechanism whereby the direct trading of stocks between customers can occur without the use of a broker or other intermediaries. The ATS market is also called the Fourth Market. There are two types: electronic communication networks (ECNs) and crossing networks. Anomalies in the market, 347- Examples of inefficient pricing in the market. Big Board, 322- Common term for the New York Stock Exchange (NYSE). Block Trades, 341- Trades of 10,000 shares or more of a given stock, or trades of shares with a market value of $200,000 or more (according to NYSE). Call money rate, 337- Also known as the broker loan rate, this is the interest rate banks charge brokers for the funding of loans to investors who buy on margin. Capitalization (or market capitalization), 345- The total market value of a firm’s common stock, which equals the number of outstanding shares times the price per share of the stock on the market. Chartist, 347- also a Technical analyst- this investor follows a strategy of selecting stocks solely on the basis of price patterns or trading volume. Consolidated Quotation System (CQS), 330- An electronic display system providing data on trades of listed stocks in different market centers. Used in the third market. Cross trading system, 330- Trading systems that allow institutional investors to match buyers and sellers directly, typically via computer. Part of the fourth market. Discount brokers, 327- Brokers that charge commissions at rates much less than those charged by other brokers, but offer little or no advice or any other service apart from execution of the transaction. Electronic communications networks (ECNs), 322- a type of ATS. Privately owned broker-dealers that operate as market participants within the NASDAQ system. Part of the fourth market. Exchange, 322- Physical location where market participants who are members of the exchange (i.e. own a “seat”) assemble to trade stocks or other securities, which are listed for trading on the exchange. Fill or kill order, 335- An order to buy or sell shares that must be executed immediately or be canceled. First market, 323, Refers to trading on exchanges of stocks listed on an exchange. Forms of pricing efficiency, 347- Known as the weak form, the semistrong form, and the strong form, these relate to the various types of information believed to be impounded or embedded in the prices of publicly traded securities. The book says that data says market is weak form. Fourth market, 323-
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FinancialMarketsChap18 - Financial Markets Chapter 18...

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