Equity Markets and Stock Valuation - Chapter 7
proxy
A grant of authority by a shareholder allowing another individual to vote his or her shares.
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.
common stock
Equity without priority for dividends or in bankruptcy.
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.
member
The owner of a trading license on the NYSE.
DMM's post
A fixed place on the exchange floor where the DMM operates.
dividend
Payment made out of a firm's earnings to its owners, in the form of either cash or stock.
dividend yield
A stock's expected cash dividend divided by its current price.
designated market maker (DMM)
An NYSE member acting as a dealer in a small number of securities on the exchange floor; formerly known as a "specialist."
broker
An agent who arranges security transactions among investors.
dealer
An agent who buys and sells securities from inventory.
inside quotes
The highest bid quotes and the lowest ask quotes for a security.
supplemental liquidity providers (SLPs)
Investment firms that are active participants in stocks assigned to them. Their job is to make a one-sided market (i.e., offering to either buy or sell).
dividend growth model
Model that determines the current price of a stock as its dividend next period divided by the discount rate less the dividend growth rate.
floor brokers
NYSE members who execute customer buy and sell orders; sometimes called $2 brokers.
preferred stock
Stock with dividend 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.
electronic communications networks (ECNs)
Websites that allow investors to trade directly with one another.
