FIN CH. 8

electronic communications network (ENC)

websites that allow investors to trade directly with one another.

secondary market

when existing shares are traded among investors.

primary market

when shares of stock are first brought to the market and sold to investors.

dividends paid

____ to shareholders represent a return on the capital directly or indirectly contributed to the corporation by the shareholders.

broker

a _____ brings buyers and sellers together but does not maintain an inventory.

dealer

a _____ maintains an inventory and stands ready to buy and sell at any time.

over the counter market

a securities market largely characterized by dealers who buy and sell securities for their own inventories

common stock

a term usually applied to stock that has no special preference either in receiving dividends or in bankruptcy.

dividend yield

calculated as the expected cash dividend divided by the current price it is conceptually similar to the current yield on a bond

arrearage

if preferred dividends are cumulative and are not paid in a particular year, they will be carried forward as a(n) _____.

proxy fight

if shareholders are not satisfied with management, an outside group of shareholders can try to obtain votes via proxy. the can vote by proxy in attempt to replace management by electing enough directors. the resulting battle is called a ______.

supplemental liquidity providers

in the NYSE, _____ are essentially investment firms that agree to be active participants in stocks assigned to them. their job is to regularly make a one-sided market. they trade purely for their own accounts, so they do not represent customers.

designated market makers

in the NYSE, the _____, formerly known as "specialists", act as dealers in particular stocks and maintains a two-sided market, meaning that they continually post and update bid and ask prices. by doing so, they ensure that there is always a buyer or seller available, thereby promoting market liquidity.

floor broker

in the NYSE, the job of a ____ is to execute trades for customers, with an emphasis on getting the best price possible.

forward PE ratio

security analysts spend a lot of time forecasting future earnings, particularly for the coming year. a PE ratio based on estimated future earnings is called a _____.

preferred stock

stock that has preference over common stock in the payment in dividends and in the distribution of corporation assets in the event of liquidation.

preemptive right

stockholders sometimes have the right to share proportionally in any new stock sold. this is called the _____.

cumulative voting

the effect of ____ is to permit minority participation. if permitted, the total number of votes that each shareholder may cast is determined first. the directors are elected all at once.

order flow

the flow of customer orders to by and sell stocks

proxy

the grant of authority by a shareholder to someone else to vote his or her shares.

inside quotes

the highest bid quotes and the lowest asked quotes for a NASDAQ-listed security.

capital gains yield

the rate at which the value of the investment grows

straight voting

with ____, the directors are elected one at a time.