MGTA02H3 Chapter Notes - Chapter 9: Tsx Venture Exchange, Market Trend, Market Capitalization

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Published on 31 Oct 2010
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SECURITIES MARKETS
-securities: stocks & bonds (which represent a secured-asset-based claim on the part of
investors) that can be bought and sold.
-markets in which stocks & bonds are sold = securities market
Primary and Secondary Markets for Securities
-primary securities markets: the sale and purchase of newly issued stocks & bonds by firms or
government
-investment banker: any financial institution engaged in purchasing and reselling new stocks
and bonds
-advise company on timing & financial terms on new issue
-by underwriting(buying) the new securities, they bear some risk.
-create the distribution network that moves the new securities through others.
-secondary securities market: the sale and purchase of previously issued stocks and bonds
(represent a majority of securities traded)
STOCKS
-each year, thousands of companies buy and sell stocks.
Common Shares
-ppl buy a companies common shares in hope that it will rise and maybe gain dividend
-market value: the current price of one share of a stock in the secondary securities market; the
real value of a share
-influenced by objective factors (profits) and subjective (unverified info. e.g. rumours)
-book value: value of a common stock expressed as total owners’ equity/the # of shares of stock
-used for comparison purposes, if market value>book value = successful
-blue-chip stocks: stocks of well established, financially sound firms
-market capitalization: the dollar value (market value) of stocks listed on a stock exchange
Preferred Shares
-usually issued w/a stated value + dividend (usually %). some are callable, less risky
-cumulative preferred shares: preferred shares on which dividends not paid in the past must
first be paid up before the firm may pay dividends to common shareholders
Stock Exchanges
-stock exchange: a voluntary organization of individuals formed to provide an institutional
setting where members can buy and sell stock for themselves and th2eir clients in accordance
with the exchange’s rule
-exchange takes place @ the trading floor until 1997 in Canada
-broker: an individual licensed to buy and sell securities for customers in the secondary market,
in return gets a commission.
-there are online, discount and full-service brokers
-there are 2 major Canadian stock exchanges; the toronto stock exchange (TSX) and Canadian
Venture Exchange (CDNX)
-foreign stock exchanges include the New York Stock Exchange (NYSE), the American Stock
Exchange (AMEX),
MGTA04 Chapter 9
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