David p echevarria 9 security markets d auction

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Unformatted text preview: 9 SECURITY MARKETS D. Auction Markets Auction 1. Orders of traders are directly matched 1. Orders 2. NYSE Members may act as dealers (spets) 2. NYSE or brokers (traders) or E. Cost of Liquidity Services: Bid–Ask Spread E. 1. 2. Bid = highest unexecuted price to buy Ask = lowest unexecuted price to sell All Rights Reserved Dr. David P Echevarria 10 MARKET MONITORING MARKET A. SEC: reporting requirements A. 1. www.sec.gov/edgar (web site for SEC reports) B. Sarbanes-Oxley (2002) 1. Cannot audit books of firm any one of whose CEO or Cannot CFO formerly worked for the auditing firm CFO 2. Require outside directors to be on audit committee 3. Members of audit committee may not receive special Members compensation compensation 4. Require CEO / CFO certification of correctness 5. Failure to comply draws fines and imprisonment All Rights Reserved Dr. David P Echevarria 11 HOMEWORK QUESTIONS A. What characteristic of preferred stock causes What sensitivity to interest rate changes? sensitivity B. What does it mean when a preferred stock is What cumulative & participating? cumulative participating C. What are preemptive rights and why are they What preemptive important to common stockholders? important D. How do we measure the cost of liquidity? E. How does an auction market differ from a dealer How market? market? F. What has been the major impact of Sarbanes-Oxley What on the stock markets? on All Rights Reserved Dr. David P Echevarria 12...
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This document was uploaded on 02/11/2014.

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