Chapter 8
dividend growth model
a model that determines the current price of a stock as its dividend next period divided by the discounted rate less the dividend growth rate
straight voting
a procedure in which a shareholder may cast all votes for each member of the board of directors
cumulative voting
a procedure in which a shareholder may cast all votes for one member of the board of directors
dividend yield
a stock's expected cash dividend divided by its current price
member
the owner of a trading license on the NYSE
dividends
payments by a corporation to shareholders, made in either cash or stock
over-the-counter OTC market
securities market in which trading is almost exclusively done through dealers who buy and sell for their own inventories
preferred stock
stock with divident priority over common stock, normally with a fixed dividend rate, sometimes without voting rights
capital gains yield
the dividend growth rate, or the rate at which the value of an investment grows
order flow
the flow of customer orders to buy and sell securities
inside quotes
the highest bid quotes and lowest ask quotes offered by dealers for a security
primary market
the market in which new securities are originally sold to investors
secondary market
the market in which previously issued securities are traded among investors
commission brokers
NYSE members who execute customer orders to buy and sell stock transmitted to the exchange floor
floor brokers
NYSE members who execute orders for commission brokers on a fee basis; somtimes called $2 brokers
floor traders
NYSE members who trade for their own accounts, trying to anticipate temporary price fluctuations
broker
an agent who arranges security transactions among investors
dealer
an agent who buys and sells securities from inventory
SuperDOT system
an electronic NYSE system allowing orders to be transmitted directly to the specialist
common stock
equity without priority for dividends or in bankruptcy
specialist
a NYSE member acting as a dealer in a small number of securities on the exchange floor; often called a market maker
specialists post
a fixed place on the exchange floor where the specialist operates
proxy
a grant of authority by a shareholder allowing another individual to vote his or her shares
electronic communications network (ECN)
a web site that allows investors to trade directly with each other