EQUITY MARKETS

Overview of Equity Markets

Public Equity

Joint Stock Company

Private Equity

Advantages

Disadvantages

Stock

Types

Common Stock

Fundamental ownership Claim

Dividends

Limited Liability

Voting rights

Preferred Stock

Cumulative Provision

Dividends

Convertible Preferred Stock

Stock Market Indexes

Strutures of Equity Markets

Market Participants

Clearing Agencies

Credit Rating Agencies

Broker-Dealers

Electronic Communication Networks

Investment Communications Networks

Investment Advisers

Securities Exchanges

Self-Regulatory Organixations (SROs)

Transfer Agents

Equity Markets

Organized Exchange

Over-the-Counter Markets

Sencondary Markets

Primary Markets

IPO

Definition

Three Choices to
Market Securities

First Public Sale

Requires SEC approval

Public Offering

Rights Offering

Private Placement

Three major stock markets

Role

Provides liquidity to security purchases

Provides continuos pricing mechanism

NYSE Euronext

NASDAQ

AMEX

Trading Floor

Floor Broker

Specialist

OTC Bulletin Board

Pink Sheet

Listing Requirements

Telecommunication networks

Specify bid and ask

Listing Requirements

Role

Monitor the behavior of
a group of stocks

Benchmarks to evaluate performance
of professional money managers

Create and monitor an index fund

Measure

Predict future market

Indexes

DJIA

S&P 500 Composite Index

Nikkei 225 Average

Main Types of Oders

Limit Orders

Market Orders

Specific The buy and sell prove

Fill or Kill

Buy or sell at the best current price

Other Concepts

Short Sales of Stock

General Market Conditions

Bull Market

Bear Market

Chicken Market

Pig Market

Reading a Stock Table

Ticker symbol

Price

Open

Close

Net change

Day's Range

52- Week High Low

Trading Volume

Market Capitalization

Dividend per share

Price/Earning Ratio

Large Financial Resources

Limited Liability

Professional management

Large-scale production

Contribution to societ

Research and Development

Double Tax

Conflict of interest

Agency problem

Neglect of minority