Finance Chapter 14
financial intermediaries
a financial institution that directs other people's money into such investments as government and corporate securities
securities act of 1933
an act that is sometimes referred to as the truth in securities act because it requires detailed financial disclosures before securities may be sold to the public
sarbanes oxley act of 2002
an act that was intended to restore confidence in the financial markets by demanding accuracy in financial reporting
capital markets
competitive markets for equity securities or debt securities with maturities of more than one year (common stock, bonds, preferred stock)
money markets
competitive markets for securities with maturities of one year or less (treasury bills, commercial paper, negotiable certificates of deposit)
electronic communication networks
electronic trading systems that automatically match buy and sell orders at specific prices
dual trading
exists one one security is traded on more than one stock exchange
federally sponsored credit agencies
federal agencies that issue securities
listing requirements
financial standards that corporations must meet before their common stock can be traded on a stock exchange, set by each exchange, requirements for NYSE are most stringent
internally generated funds
funds generated through the operations of the firm, principle sources are retained earnings and cash flow added back from depreciation and other noncash deductions
securities exchange act of 1934
legislation that established the SEC to supervise and regulate the securities markets
market efficiency
occurs when prices adjust rapidly to new information, there is a continuous market, the market can absorb large dollar amounts of securities without destabilizing prices
specialists
ones who make a market in their assigned stocks by standing ready to buy or sell shares at the current bid and ask price
municipal securities
securities issued by state and local government units; the income generated from these is exempt from federal income taxes
secondary trading
the buying and selling of publicly owned securities in secondary markets
three sector economy
the economy consists of business, government, and households; households are major suppliers of funds, business and government are users of funds
securities acts amendments of 1975
the major feature of this act was to mandate a national securities market
the wall street reform and consumer protection act of 2010
the most comprehensive financial reform legislation since the Great Depression, the government will break up companies that are "too big to fail" and restructure them without taxpayer dollars
securities and exchange commission
the primary regulatory body for security offerings in the United States
