Chapter 3- Securities Transactions and Market Indexes Flashcards Preview

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Flashcards in Chapter 3- Securities Transactions and Market Indexes Deck (17):

Odd-Lot Orders

- orders for less than 100 shares of stock


Round-Lot Orders

-orders for less than 100 shares of stock


Market Orders

- Buy or sell at best availible price at the time your trade comes up for execution, fastest way to fill order


Limit Orders

- order to by at or below a specified price or to sell at or above a specified price, if price limits are not met, order is not filled


Fill or Kill Order

-limit orders whihc is cancled if not filled immediately


Day Orders

- limit orders that expires at end of the day if not filled


Good-Til-Cancled Orders

- limit orders that remains in effect for six months unless filled, cancled, or renewed


Stop-Loss Orders

- typically used to protect investors from stock price declines - suspended order is placed to sell a stock if price reaches or falls below a specified level - orders can be day orders or GTC orders - once activated beomes a market order - can also use to stop orders to buy stocks, such as to limit risk on short sales - more effective than stop limit


Stop-Limit Orders

-orders to sell stock at or better than specified price - prevents sales at undesireable price - no sale may occur if price continues to decline


Reasons to use Market Avg. and Indexes

- take temperature of the market - gauge general market conditions - compare your portfolio performance - shows unusual happenings in the market - market cycles and trends - general behavior of stock prices over time


Dow Jones Industrial Average

- largest market index - most popular average - compromised of 30 high quality, diversified stock - tracks overall market activity - stock makeup can change to better reflect the broader stock market - has changed over the years du to the changing economy


Dow Jones Transportation Average

- compromised of 20 stocks


Dow Jones Utilities Average

- compromised of 15 public utility stocks


Dow Jones Problems

- narrowly base - weighting scheme favors high priced stocks, which makes it more volatile than others - not all companies are industrials - overstates market volatility


S & P 500

- compromised of 500 stocks from major industry sectors - more broad based and representative of the overall market than DJIA - true index from 1941-1943 - market value weighted- prices are weighted based on the number of shares oustanding - larger firms have a bigger impact


Value Line Composite Index

- assumes you invest equal amounts of money in each stock - uses equal weighting to eliminate the bias of stocks with large total marke values


Europe/Asia/Far East (EAFE MSCI)

- tracks stock trade on foreign exchanges