Investment Chap2
Chapter 2
Markets and Transactions
T Outline
Learning Goals
I. Securities Markets A) Types of Securities Markets 1. The Primary Market a. Going Public: The IPO Process b. The Investment Banker’s Role 2. Secondary Markets B) Organized Securities Exchanges 1. The New York Stock Exchange a. Trading Activity b. Listing Policies 2. The American Stock Exchange 3. Regional Stock Exchanges 4. Options Exchanges 5. Futures Exchanges C) The Over-the-Counter Market 1. New Issues and Secondary Distributions 2. The Role of Dealers 3. Nasdaq 4. Alternative Trading Systems D) General Market Conditions: Bull or Bear Concepts in Review II. Globalization of Securities Markets A) Growing Importance of International Markets B) International Investment Performance C) Ways to Invest in Foreign Securities D) Risks of Investing Internationally Concepts in Review
Chapter 2
Markets and Transactions
17
III. Trading Hours and Regulation of Securities Markets A) Trading Hours of Securities Markets B) Regulation of Securities Markets 1. Securities Act of 1933 2. Securities Exchange Act of 1934 3. Maloney Act of 1938 4. Investment Company Act of 1940 5. Investment Advisors Act of 1940 6. Securities Acts Amendments of 1975 7. Insider Trading and Fraud Act of 1988 8. Sarbanes-Oxley Act of 2002 Concepts in Review IV. Basic Types of Securities Transactions A) Long Purchase B) Margin Trading 1. Essentials of Margin Trading a. Magnified Profits and Losses b. Advantages and Disadvantages 2. Making Margin Transactions a. Initial Margin b. Maintenance Margin 3. The Basic Margin Formula 4. Return on Invested Capital 5. Uses of Margin Trading C) Short Selling 1. Essentials of Short Selling a. Making Money When Prices Fall b. Margin Requirements and Short Selling c. Who Lends the Securities? d. Advantages and Disadvantages 2. Uses of Short Selling Concepts in Review
Summary
Putting Your Investment Know-How to the Test Discussion Questions Problems Case Problems 2.1 Dara’s Dilemma: Hold, Sell, Or? 2.2
Markets and Transactions
T Outline
Learning Goals
I. Securities Markets A) Types of Securities Markets 1. The Primary Market a. Going Public: The IPO Process b. The Investment Banker’s Role 2. Secondary Markets B) Organized Securities Exchanges 1. The New York Stock Exchange a. Trading Activity b. Listing Policies 2. The American Stock Exchange 3. Regional Stock Exchanges 4. Options Exchanges 5. Futures Exchanges C) The Over-the-Counter Market 1. New Issues and Secondary Distributions 2. The Role of Dealers 3. Nasdaq 4. Alternative Trading Systems D) General Market Conditions: Bull or Bear Concepts in Review II. Globalization of Securities Markets A) Growing Importance of International Markets B) International Investment Performance C) Ways to Invest in Foreign Securities D) Risks of Investing Internationally Concepts in Review
Chapter 2
Markets and Transactions
17
III. Trading Hours and Regulation of Securities Markets A) Trading Hours of Securities Markets B) Regulation of Securities Markets 1. Securities Act of 1933 2. Securities Exchange Act of 1934 3. Maloney Act of 1938 4. Investment Company Act of 1940 5. Investment Advisors Act of 1940 6. Securities Acts Amendments of 1975 7. Insider Trading and Fraud Act of 1988 8. Sarbanes-Oxley Act of 2002 Concepts in Review IV. Basic Types of Securities Transactions A) Long Purchase B) Margin Trading 1. Essentials of Margin Trading a. Magnified Profits and Losses b. Advantages and Disadvantages 2. Making Margin Transactions a. Initial Margin b. Maintenance Margin 3. The Basic Margin Formula 4. Return on Invested Capital 5. Uses of Margin Trading C) Short Selling 1. Essentials of Short Selling a. Making Money When Prices Fall b. Margin Requirements and Short Selling c. Who Lends the Securities? d. Advantages and Disadvantages 2. Uses of Short Selling Concepts in Review
Summary
Putting Your Investment Know-How to the Test Discussion Questions Problems Case Problems 2.1 Dara’s Dilemma: Hold, Sell, Or? 2.2