Exam 17: Markets for Common Stock: The Basic Characteristics

The ________ is a conditional order and is executed only if the limit price or a better price can be obtained. Another type of conditional order is the ________, which specifies that the order is not to be executed until the market moves to a designated price, at which time it becomes a ________.

In a ________ stop order, the designated price is ________ than the current market price of the stock, while in a ________ limit order, the designated price is ________ than the current market price of the stock.

________ involves the sale of a security not owned by the investor at the time of sale.

Discount brokers have been particularly ineffective in inducing retail investors to participate in the market for individual stocks.

Which of the below statements is FALSE?

During the past 50 years, common stock holdings in the United States have become increasingly institutionalized. The major institutional holders include ________.

The key to instituting circuit breakers is coordination and infrequency.

With the exception of the ________, all of the most widely used indexes are market-value weighted.

The brokerage firm can also choose to execute the trade on an agency basis. In this case, the dealer would commit its own capital to buy or sell the portfolio and complete the investor's transaction immediately.

________ means that the price of the security reflects the past price and trading history of the security.

From a dealer's perspective, program trades can be conducted in two ways. Name and describe these two ways.

Explicit trading costs include impact costs, timing costs, and opportunity costs.

Describe a "soft dollar" arrangement and how it differs from a "hard dollar" arrangement.

The NYSE and Nasdaq reduced the tick size to pennies 2001. This reduction in the tick size narrowed the bid-offer spread considerably, which ________.

Participants in the upstairs market play a key role ________.

Stock market ________.

If the price at a future date ________ the purchase price, then there is a ________.

For common stock investors, the return realized by holding this investment comes from ________.

Equity securities represent ________ interest in a corporation. Holders of equity securities are entitled to the earnings of the corporation when those earnings are distributed in the form of ________. The key distinction between common stock and preferred stock lies in the degree to which they may participate in any distribution of earnings and the priority given to each in the ________.

Which of the below statements is FALSE?