Financial System - Securities Market

securities market

the place where financial securities are issued to investors and traded between investors; in practice, the sum of the primary market and the secondary market is the securities market; financial markets emphasize what is being traded (the financial instrument) whereas securities market emphasize how trade occurs

financial security

a tradeable financial asset that holds monetary value; usually distingushed with a unique identifier such as a ticker or CUSIP (financial assets are the generic term, like a truck, while financial securities are the specific term, like a Ford F150, a specific kind of truck)

ticker

an abbreviation used to uniquely identify publicly traded companies and their stocks on a stock exchange

primary market

the place where financial securities are issed to investors; known for providing capital to companies; transactions usually facilitated by investment banks

issuing a security

creating and selling a financial security to raise money (capital)

raising capital

the process of receiving money by issuing a security

secondary market

the place where financial securities are traded between investors; known for providing liquidity to investors; transactions usually facilitated by brokers

public company

a business whose shares can be traded on an exchange; usually owned by a large number of investors

private company

a business whose shares cannot be traded on an exchange; usually owned by a small number of investors

going public

the process by which a private company becomes a public company by selling shares to investors on an exchange through an initial public offering (IPO)

initial public offering (IPO)

the process by which a privately held company (1) raises capital and (2) becomes a publicly traded company by issuing shares of common stock to the public for the first time

security exchange

the place where financial securities are (1) issued to investors (on the primary market) and (2) exchanged between investors (on the secondary market); provides the infrastructure and platform which makes the primary market and secondary market practical

central exchange

a type of exchange where securities are bought and sold based on standardized rules and regulatory oversight through a formal system (in contrast to an over the counter market)

over the counter (OTC) market

a type of exchange where securities are bought and sold directly between buyers and sellers (in contrast to a central exchange)

new york stock exchange (NYSE)

the biggest and most well known exchange in the world, which is a place where companies can issue stock and where investors can buy and sell stock

NASDAQ

a very large and well known stock exchange, a place where companies can issue stock and where investors can buy and sell stock

market index

a statistical measure that represents the performance of a market

S&P 500

a stock market index that measures the stock performance of 500 of the largest publicly traded companies in the United States

Dow Jones Industrial Average (DJIA)

a stock market index that measures the stock performance of 30 large, publicly-owned companies based in the United States