HLTHAGE 4Z06 Lecture Notes - Mutual Fund, Investing Online, Nasdaq Composite

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Published on 19 Apr 2013
School
McMaster University
Department
Health, Aging and Society
Course
HLTHAGE 4Z06
Professor
Chapter 9
Stocks/bonds called securities because they are asset-based/secured claims.
Primary securities markets: buying and selling of new stocks and bonds, new
stock can be sold to a private group, this is known as private placement
Investment banking: purchasing and reselling new securities. Offer these 3
services:
oAdvise companies on the timing and terms of their new issue
oUnderwrite the new securities (buy them all)
oCreate a distribution network for the new securities
The secondary securities market (buy/selling previously issued securities) is
handled by other organizations.
Stocks
Common Shares: bought in hopes that they increase in value, riskiest of all
securities
oMarket Value: current price and real price in the secondary securities
market. Investor relations and stockbroker recommendations affect
market value.
oBook Value: dividing owner’s equity by the number of shares. Typically
it is less than market value for successful companies.
oBlue-chip stocks are stocks offered by well-established firms.
oMarket Capitalization: number of stocks times market value.
Preferred Shares: issued with stated value and dividends are paid based on
this value. Some are ‘callable’ meaning they can be bought back for the ‘call
price’
oCumulative preferred shares: missed passed dividend payments must
be paid to the holders before the company can issue dividends to
common stock holders.
oPurchase price can fluctuate, but dividends are fixed.
Stock Exchanges
Stock Exchange: voluntary organization that handles the secondary exchange
of securities, individuals purchase seats on the exchange.
Trading floor: a physical location in which trading occur, now mostly
electronic
Broker: receive buy/sell orders and receive commissions
oDiscount brokers do not offer personal investment advice and are paid
on salaries, so they are cheaper to use than full-service brokers. IPO
stocks are only accessible through a full service broker. Online trading
is an increasing trend.
Canadian Stock Exchanges: the Toronto Stock Exchange (TSX) and the
Canadian Venture Exchange (CDNX).
Foreign Stock Exchanges: New York Stock Exchange (NYSE, most popular,
requirements on earning power to be listed), American Stock Exchange
(AMEX, less stringy requirements), regional stocks (established long before
advanced telecommunications e.g. Chicago Stock Exchange).
Over-the-Counter (OTC) Market: trade stocks outside formal settings of
organized stock exchanges, securities are kept like inventory in a retailer.
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Document Summary

Chapter 9: stocks/bonds called securities because they are asset-based/secured claims, primary securities markets: buying and selling of new stocks and bonds, new stock can be sold to a private group, this is known as private placement. Stocks securities: common shares: bought in hopes that they increase in value, riskiest of all, market value: current price and real price in the secondary securities market. Investor relations and stockbroker recommendations affect market value. it is less than market value for successful companies: book value: dividing owner"s equity by the number of shares. Typically: blue-chip stocks are stocks offered by well-established firms, market capitalization: number of stocks times market value, preferred shares: issued with stated value and dividends are paid based on this value. Ipo stocks are only accessible through a full service broker. Online trading is an increasing trend: canadian stock exchanges: the toronto stock exchange (tsx) and the. It is poised to be the preferred global stock market.

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