Finance E1
Terms
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- Primay Market
- Corporations issue bods are stock.
- Money Market
- Short term securites. Ex: Treasury Bill, Commercial Paper, CD's, Federal agency securites.
- NYSE
- Assets & Market Value at least 100 million Pre-tax income at least 2.5 million Min 1.1 mil publicly held shares At least 2200 shareholders who own a minimum of 100 shares each Monthly trading volume: 1.1 million shares Most Prestegious
- Secondary Market
- Investors buy and sell previously issued securites.
- NASDAQ
- Computerized network on the OTC market.
- Red Herring
- Document sent out to possibile investors prior to approva; by he SEC.
- Stop Order
- Given to firm to prevent the sell of securites in the case that the firm is not approved ny the SEC.
- Capital Market
- Long term securites. Ex: Commo stock, Motgages, Tresury Notes/bonds, Coporate/ Foregin bonds, State/Local Bonds/Notes, Consumer Loans.
- Negotiated Purchase
- Most Common Method of distrubution
- Competitive bid
- Method of distrubution with regulatory Issues
- Flotation Cost Statistics
- Bonds: Lower cost than Common Stocks Large offerings (Say $500 million) have lower cost than selling smaller offerinfs (say 50 million). Bonds: 1-10 % Common Stock 4-20% IPO's 15-35%
- Default Risk Premium
- Risk that the issuer of of securites doesn't meet interest or pincipal payement on time.
- Maturity Premium
- Added Risk Premium for long term securites.
- Liquidity Premium
- Added risk premium for securites which are not activley traded in the market.