Introduction to Financial Market - Annotated

They invest large amounts of money on behalf of others, such as pension funds and mutual funds.

Some brokers automatically cancel GTC orders after a set period, such as 30 or 60 days.

The selling price.

Markets where assets are bought or sold for immediate delivery.

High returns through capital appreciation and dividends.

They are used for trading stocks and long-term debt (one year or longer).

Raw materials or primary agricultural products that can be bought and sold.

The buying price.

To ensure markets operate fairly and efficiently, protecting investors from fraud.

Markets where participants agree to buy or sell an asset at a future date.

They can fluctuate widely, indicating higher risk.

The market where corporations raise capital by issuing new securities.

Their prices tend to rise when inflation increases.

They underwrite and distribute new investment securities and help businesses obtain financing.

A buy or sell order that expires at the end of the trading day if not executed.

They are considered less risky than stocks, particularly government bonds.

They generally have lower expense ratios compared to mutual funds.

Brokers act as intermediaries, facilitating transactions between buyers and sellers.

A corporation owned by a relatively large number of individuals not actively involved in management.

An order to buy or sell a stock immediately at the best available current price.

The price that balances buy and sell orders at any given time.

It will only execute at the limit price or lower.

CDs are generally low-risk, especially if issued by a bank insured by the PDIC.

Digital or virtual currencies that use cryptography for security.

An order that remains active until it is executed or canceled by the investor.

A pooled investment vehicle that collects money from many investors to invest in a diversified portfolio of stocks, bonds, or other securities.

They buy and sell securities on their own accounts, providing liquidity.

Investors who want to place an order that stays active until the desired price is reached without constant market monitoring.

ETFs are traded in public markets, while mutual funds are not.

An order that must be executed immediately, with any unfilled portion being canceled.

To implement monetary policy, regulate financial institutions, and ensure the stability of the financial system.

An order placed below the current market price that is triggered when the market price reaches the stop price.

Facilities needed to conduct security transactions not conducted on physical location exchanges.

Debt instruments issued by governments, municipalities, or corporations to raise capital.

Professional portfolio managers.

A whole range of financial services, including investment banking, brokerage operations, insurance, and commercial banking.

Physical asset markets deal with tangible products like wheat and machinery, while financial asset markets deal with stocks, bonds, and derivatives.

To pool investor funds to purchase financial instruments and reduce risks through diversification.

Immediate execution and all-or-nothing execution.

They buy and manage entire firms rather than just purchasing stock.

An order placed above the current market price that is triggered when the market price reaches the stop price.

It becomes a market order and is executed at the best available price.

Potential losses are unlimited if the stock price rises instead of falls.

They can be complex and are generally considered higher-risk.

They offer liquidity as they are traded on stock exchanges.

Markets for trading financial assets like stocks, bonds, ETFs, and commodities.

Retirement plans funded by corporations or government agencies for their workers.

Ensuring there is enough liquidity in the market by being ready to buy and sell securities.

The price at which the stock would sell if all investors had all knowable information about it.

An order to buy or sell a stock at a specific price or better.

Time deposits offered by banks where investors commit to leaving a lump sum for a fixed period in exchange for higher interest.

High volatility influenced by geopolitical events and economic conditions.

Early withdrawal usually incurs a penalty, making them less liquid than savings accounts.

Risk management through hedging.

Companies that own, operate, or finance income-generating real estate.

Private individuals investing their personal savings in securities.

A corporation owned by a few individuals typically associated with the firm's management.

Ownership shares in a company.

They involve borrowing or lending funds for short periods (less than one year).

Stocks can be bought and sold relatively easily on the stock market.

The market where securities are traded among investors after being issued by corporations.

A large collection of brokers and dealers connected electronically for trading in securities.

They serve as a traditional department store of finance for a variety of savers and borrowers.

Periodic interest payments and the return of the principal amount at maturity.

Through dividends, often offering higher yields than bonds or stocks.

A cooperative association whose members share a common bond, often providing the cheapest source of funds for individual borrowers.

They take savings in the form of periodic premiums, invest these funds, and make payments to beneficiaries of the insured parties.

An order that must be executed immediately in its entirety or not at all; if not fully filled, it is canceled.

Only accredited investors, as they require less SEC regulations.

IOC orders allow for partial execution, while FOK orders require the entire order to be filled.

Physical location exchanges and electronic dealer-based markets.

Selling borrowed shares of a stock with the expectation that the price will decline, allowing the investor to buy back at a lower price.

Regulatory uncertainty that can affect their value and use.

Bond prices are inversely related to interest rates; when interest rates rise, bond prices typically fall.

ETFs can be bought and sold throughout the trading day, providing greater flexibility.

The current price of a stock.

Market orders are executed quickly, prioritizing speed over price.

A market where prices are close to intrinsic values and stocks seem to be in equilibrium.

An order to buy or sell a stock once it reaches a specified price, known as the stop price.

A fixed interest rate, providing predictable income.

They are extremely volatile, with significant price fluctuations.

Bonds provide regular interest payments (coupon payments).

Investment funds that are traded on stock exchanges like individual stocks and typically track an index, sector, or commodity.

Private markets involve direct transactions between two parties, while public markets involve standardized contracts traded on organized exchanges.

An order that combines features of a stop order and a limit order, becoming a limit order once the stop price is reached.

Financial instruments whose value is derived from an underlying asset.

They provide diversification by investing in a variety of assets.

To facilitate the trading of financial assets and instruments.