Unformatted text preview: 9 SECURITY MARKETS
D. Auction Markets
1. Orders of traders are directly matched
2. NYSE Members may act as dealers (spets)
or brokers (traders)
or E. Cost of Liquidity Services: Bid–Ask Spread
2. Bid = highest unexecuted price to buy
Ask = lowest unexecuted price to sell All Rights Reserved Dr. David P Echevarria 10 MARKET MONITORING
A. SEC: reporting requirements
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
CFO formerly worked for the auditing firm
2. Require outside directors to be on audit committee
3. Members of audit committee may not receive special
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
sensitivity to interest rate changes?
B. What does it mean when a preferred stock is
cumulative & participating?
C. What are preemptive rights and why are they
important to common stockholders?
D. How do we measure the cost of liquidity?
E. How does an auction market differ from a dealer
F. What has been the major impact of Sarbanes-Oxley
on the stock markets?
All Rights Reserved Dr. David P Echevarria 12...
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This document was uploaded on 02/11/2014.
- Fall '09