Financial Analysis. Lesson 31. Capital Markets and Securities Trading
Financial Analysis. Lesson 31. Capital Markets and Securities Trading
Capital markets facilitate buying and selling of securities like stocks and bonds.
Primary market is where new securities are issued to investors directly.
Secondary market enables trading of existing securities among investors.
Stock exchange provides a regulated platform for securities trading.
Over-the-counter (OTC) market involves trading securities outside formal exchanges.
Initial Public Offering (IPO) is a company's first sale of stock to the public.
Underwriting involves financial institutions guaranteeing the sale of new securities.
Market maker provides liquidity by quoting buy and sell prices.
Bid-ask spread is the difference between buy and sell prices.
Limit order allows setting a price limit for buying or selling securities.
Market order executes a buy or sell immediately at current prices.
Day trading involves buying and selling securities within a single trading day.
Swing trading holds positions for days to benefit from price swings.
Short selling profits from declining security prices by selling borrowed assets.
Margin trading uses borrowed funds to increase investment leverage.
Circuit breaker halts trading temporarily during major price movements to prevent panic.
Blue-chip stocks represent financially strong, stable companies with solid performance.
Penny stocks are low-priced, high-risk shares of smaller companies.
Dividend yield shows percentage return on investment from dividends alone.
Price-to-earnings (P/E) ratio compares a stock’s price to earnings per share.
Index fund tracks a specific market index to match its performance.
Exchange-traded fund (ETF) is a pooled fund traded on stock exchanges.
Hedging reduces risk exposure in securities investments.
Arbitrage exploits price differences across markets for profit.
Liquidity reflects how quickly an asset can be converted to cash.
Volatility measures the degree of price fluctuations in securities.
Beta quantifies stock sensitivity relative to market risk.
Alpha indicates performance above a benchmark or expected market return.
Securities lending involves lending securities for additional income generation.
Order book is a record of all buy and sell orders for a security.
Technical Examples:
Limit orders control prices at which securities are bought or sold.
Short selling allows profiting when a stock's price declines.
Market makers ensure liquidity by constantly quoting bid and ask prices.