BU473 Chapter Notes - Chapter 4: Systematic Risk, Stock Split, S&P 500 Index

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22 Jun 2016
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Characteristics of a good market: availability of past transaction information, must be timely and accurate. Low transaction costs: rapid adjustments of prices to new information: external efficiency. Stocks issues: seasoned new issues: new shares offered by firms that already have stock outstanding. Ipos: issuing for the first time: private placements, can be traded among large sophisticated investors. Secondary markets: outstanding securities are bought and sold by investors, why are they important, provides liquidity, helps determine market prices for newly issued shares. Secondary equity markets: primary listing markets, tsx, nyse, tsx has 2 tiers: Tier 1: senior listing of large canadian companies. Tier 2 (tsx venture exchange): junior listed companies: global. Limit orders: order specifies the buy or sell price. Market orders: buy or sell at the best current price, provides immediate liquidity. Short sale of a stock: can only be made on an uptick trade, must pay any dividends to lender, margin requirements apply.

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