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18. Financing & Investing through Securities Markets

18. Financing & Investing through Securities Markets. Part 2. Topics. How securities are bought & sold Primary & secondary markets Ways of buying & selling securities Sources of financial information Newspaper coverage of securities transactions Stocks, bonds, mutual funds The Internet

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18. Financing & Investing through Securities Markets

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  1. 18. Financing & Investingthrough Securities Markets Part 2

  2. Topics • How securities are bought & sold • Primary & secondary markets • Ways of buying & selling securities • Sources of financial information • Newspaper coverage of securities transactions • Stocks, bonds, mutual funds • The Internet • Brokerage firm reports • Business periodicals • Corporate reports • Investors’ services • Security averages • Government regulation of securities

  3. Buying & Selling Securities • Primary market • Investment banking firm • Initial public offering (IPO) • Two basic methods of selling stock: • Use investment banking firm • Sell security issue directly to current stockholders • Secondary market • Securities exchange • NYSE • AMEX • NASDAQ

  4. Buying & Selling Securities (Cont.) • Ways of buying & selling securities • Account executive • Market order, limit order, discretionary order • Computerized transactions • Investment software (e.g., Microsoft Money) • Online discount brokers (e.g., eTrade) • Direct investing • Dividend reinvestment plans & stock purchase programs • Program trading (used by institutional investors & individuals) • Fourth Market • Commissions

  5. Sources of Financial Information • Newspaper coverage of securities transactions • Stocks (see Figure 18.2) • Bonds (see Figure 18.3) • Mutual funds (see Figure 18.5) • The Internet • Brokerage firm reports • Business periodicals • Corporate reports • Investors’ services

  6. Security Averages • Security index • Average of current market prices of selected stocks • Dow Jones Industrial Average • Standard & Poor’s 500 Stock Index • New York Stock Exchange Composite Index • American Stock Exchange Index • NASDAQ Composite Index

  7. Regulation of Securities • State laws (Blue-sky laws) • Federal legislation • Securities Act of 1933 (Truth in Securities Act) • Securities Exchange Act of 1934 (Created SEC) • Maloney Act of 1938 (Established NASDAQ) • Investment Company Act of 1940 • Investment Advisers Act of 1940 • Federal Securities Act of 1964 • Securities Investor Protection Act of 1970 • Securities Amendments Act of 1975 • Insider Trading Sanctions Act of 1984 • Insider Trading and Securities Fraud Enforcement Act of 1988

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