Chapter 3

Highest price an investor is willing to pay.

Lowest price an investor is willing to pay.

Gap between the bid and ask prices that represents a cost to the investor.

Unique stock identifier with one to five letters

Number of shares sought by current buyers.

Number of shares offered by current sellers

Number of active buyers and sellers.

Instruction to buy or sell at current market price.

Instruction to buy or sell at a specific price.

Market order to buy or sell a certain quantity of a security if a specific price is reached or passed.

Position that is liquidated by the execution of a stop order.

Stop order to sell a long position at a specific price that is below the current market price.

Buy order that is to be held until the market price rises to a specified stop price.

Order to buy or sell a certain quantity of a security at a specified price or better, but only after a specified price has been reached.

Instruction to biuy or sell during the present trading session.

A limit order that has yet to be executed.

A limit order that is open until executed or canceled by the investor.

Buy or sell instruction that must be filled exactly or not at all.

All-or-None order that must be immediately filled or canceled.

Transaction of at least 10,000 shares usually matched outside the auction process and then cleared through the exchange.

Illusion that more information creates more knowledge and better predictions.

Belief that people have influence over the outcome of uncontrollable events.

Account that holds securities purchased with a combination of cash and borrowed funds.

Amount borrowed to buy or maintain a security investment.

Broker's demand for additional collateral when the equity has declined below the maintenance margin level.

Interest rate charged to investors using margin debt.

Sale of borrowed stock used to profit from falling stock price.

Return borrowed shares.

Number of shares sold short.

Short interest expressed in terms of an average day's trading volume.

Pressure of short sellers through margin calls caused by rapidly appreciating stock prices.

SEC criterion that allows a short sale to occur if the current bid price is higher than the previous bid price.

Strategy of investing a fixed dollar amount in a security at regular intervals.

Newly issued common stock in the primary market.

Issuance of a security to raise additional capital for which there is already and existing public market.

Public sale of previously issued securities held by large investors, corporations, or institutional investors.

Sale to a small group of investors, generally under exemption of SEC and state securities registration requirements.

Document filed with the SEC that describes a private placement.

Financial firm that helps other firms raise capital by selling securities to investors in the primary market.

Investment bank that endorses and sponsors a company's new securities.

Series of investment banker presentations to promote company securities being sold.

Security offering in which the investment banker underwrites or purchases the entire issue from the corporation and reoffers the securities to the general public.

Security offering in which the investment banker simply agrees to make its best effort at selling the agreed on amount of debt and equity securities.

Security offering in which a complete sale is required.

Group of underwriters who agree to participate in selling an issue.

Lead investment bank in a syndicate.

Investment banker's allocation of the new shares.

Contractual obligation of syndicate member.s

Advertisement announcing details of an upcoming security offering.

SEC document that describes an offering.

Date the investment bank submits a registration statement with the SEC.

Period of time during which the SEC is examining the registration materials and the investment bankers are conducting market activities.

Preliminary statement of offering characteristics.

Nickname for the preliminary prospectus.

Date securities are offered to institutional investors and the general public.

Disapproval notice issued by the SEC.

Required analysis of the security issuer by the underwriter.

Final statement of offering.

IPO purchase in the primary market quickly followed by a sale on the stock exchange.