Stock Markets

Stock Basics:

-Shareholder Voting

  • Sraight Voting

  • Cumulative Voting

  • Classes of Stock

—Shareholder RIghts

  • Animal Meeting

  • Proxy



Mechanics of stock:

  • Market ORder

  • limit order

  • round lot 

  • - 

  • -




Preferred Stock

  • Cumulative vs Non-Cumulative: If the company has to suspend the payments, Cumulative means they must pay all the share/preferred stock.

  • Participating vs Non- Participation: Participating sometimes gets extra dividend

  • Equity or Debt?: 


Primary Stock Markets

  • where corps make funds through new security issues, raise money thorough investment banks

  • Investment banks act as distribution agents and principles in first commitment underwriting.

  • Syndicate, wokring in concert to issue stock _

  • Going Public: and IPO (Initial Public Offering) is the first issue of financial instruments

  • Seasoned Offering: already public, but offer more shares

    • pre-emptive rights allow stockholders to maintain ownership

  • Red Herring Prospectus - preliminary version of prospe

  • Shelf Registrations


Secondary Markets:

  • Major Stock Markets: NYSE, NASDAQ 

  • ETFs trade on exchanges just like stocks

  • Flash Trading: Using computerized stats to see information earlier than when it hits the markets

  • Naked Access: When brokers allow traders to engage in high frequency trades

  • Dark Pools of Liquitidity: Networks providing liquidity but do not dislpay trades on order books

  • Stock market index: composite value of a group of secondary market traded stocks

    • Price weighted

    • Value Weighted Index (size of company): 

  • Efficient Market Hypothesis

    • Market Efficiency: The speed with which security prices reflect unexpected news events. What is your Definition of Information?

      • Strong Form: Stock prices fully reflect all information about the firm, both public, private , and past information. Even learning insider information will not help earn more than the required rate of return. Not true because you can make money off of insider information.

      • Semi-Strong: Trading based off all public & past information. (financial statements, historical trades) Prices do not reflect insider information.

      • Weak Form: Trading based off of only past information. Not current or insider information. Prices already reflect past information. If you reject weak form, then all other forms are also rejected