chapter 12 - 6 B How Trades are Executed 3 Effect of the...

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1 CHAPTER 12 Market Microstructure and Strategies
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2 CHAPTER 12 OVERVIEW This chapter will: A. Describe the common types of stock market transactions B. Explain how trades are executed C. Explain the role of electronic communication networks in executing transactions D. Describe the regulation of stock trading E. Explain how barriers to international stock trading have decreased
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3 A. Stock Market Transactions 1. Placing an Order a. Stop-Loss Order b. Stop-Buy Order c. Placing an Order Online 2. Margin Trading a. Impact on Returns b. Margin Calls
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4 A. Stock Market Transactions 3. Short Selling a. Measuring the Short Position of a Stock b. Using a Stop-Buy Order to Offset Short Selling 4. Investing in Stock Indexes a. Comparison of ETFs with Mutual Funds b. Types of ETFs
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5 B. How Trades are Executed 1. Floor Brokers 2. Specialists a. Making a Market b. Market-Makers on the Nasdaq
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Unformatted text preview: 6 B. How Trades are Executed 3. Effect of the Spread on Transaction Costs a. Order Costs b. Inventory Costs c. Competition d. Volume e. Risk 7 C. ECNs 1. Electronic Communication Networks (ECNs) a. Interaction between Direct Access Brokers and ECNs 2. Program Trading a. Impact Program Trading on Stock Volatility b. Collars Applied to Program Trading 8 D. Regulation of Stock Trading 1. Circuit Breakers 2. Trading Halts 3. Securities and Exchange Commission (SEC) a. Structure of the SEC b. Key Divisions of the SEC c. SEC Oversight of Corporate Disclosure d. SEC Oversight of Analyst Recommendations 9 E. How Barriers to International Stock Trading Have Decreased 1. Reduction in Transaction Costs 2. Reduction in Information Costs 3. Reduction in Exchange Rate Risk...
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chapter 12 - 6 B How Trades are Executed 3 Effect of the...

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