股票与投资分析Chap003.docx

Chapter03-SecuritiesMarkets

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Chapter03

SecuritiesMarkets

AnIPOisthefirsttimeaformerlyprivately-ownedcompanysellsstocktothegeneralpublic.AseasonedissueistheissuanceofstockbyacompanythathasalreadyundergoneanIPO.

Theeffectivepricepaidorreceivedforastockincludesitemssuchasbid-askspread,brokeragefees,commissions,andtaxes(whenapplicable).Thesereducetheamountreceivedbyasellerandincreasethecostincurredbyabuyer.

Theprimarymarketisthemarketwherenewly-issuedsecuritiesaresold,whilethesecondarymarketisthemarketfortradingexistingsecurities.Afterfirmsselltheirnewly-issuedstockstoinvestorsintheprimarymarket,newinvestorspurchasestocksfromexistinginvestorsinthesecondarymarket.

Theprimarysourceofincomeforasecuritiesdealeristhebid-askspread.Thisisthedifferencebetweenthepriceatwhichthedealeriswillingtopurchaseasecurityandthepriceatwhichtheyarewillingtosellthesamesecurity.

Whenafirmisawillingbuyerofsecuritiesandwishestoavoidtheextensivetimeandcostassociatedwithpreparingapublicissue,itmayissuesharesprivately.

Astoporderisatradeisnottobeexecutedunlessstockhitsapricelimit.Thestop-lossisusedtolimitlosseswhenpricesarefalling.Anorderspecifyingapriceatwhichaninvestoriswillingtobuyorsellasecurityisalimitorder,whileamarketorderdirectsthebrokertobuyorsellatwhateverpriceisavailableinthemarket.

Manylargeinvestorsseekanonymityforfearthattheirintentionswillbecomeknowntootherinvestors.Largeblocktradesattracttheattentionofothertraders.