Securities Markets Chapter 6

Markets Goods Services Ownership of assets Risk exposure

Good Markets Availability of information Liquidity –Marketability –Depth Transactions costs

Primary and Secondary Markets Primary Markets –Market for new issues Secondary Markets –Trading among investors

Primary Markets T-bills, notes and bonds –Auctions Municipal bonds –Underwriting Competitive Negotiated –Private placement Corporate bonds –Shelf registration

Primary Markets Corporate stock –Seasoned equity offering –IPO Underwriting structure –Lead underwriter –Underwriting group –Selling group

Secondary Markets Exchanges and OTC Auction versus Dealer Exlcusive dealer Call versus continuos markets Third and Fourth markets

Brokers and dealers Specialist Other members –Commission brokers –Floor brokers –Registered traders

Listing requirements NYSE –Market cap > 100 m NASDAQ (NMS) –Market cap > 10 m

Types of orders Market order Limit order Stop order

Margin trading Margin = Equity Initial and mainatenance margins

Shortselling Speculating on price declines Call loan Margin requirements Up tick requirement