A market that issues new securities on an exchange. Companies, governments and other groups obtain financing through debt or equity based securities. Primary markets are facilitated by underwriting groups, which consist of investment banks that will set a beginning price range for a given security and then oversee its sale directly to investors. Also known as "new issue market" (NIM). Taobiz explains Primary Market The primary markets are where investors can get first crack at a new security issuance. The issuing company or group receives cash proceeds from the sale, which is then used to fund operations or expand the business. Exchanges have varying levels of requirements which must be met before a security can be sold. once the initial sale is complete, further trading is said to conduct on the secondary market, which is where the bulk of exchange trading occurs each day. Primary markets can see increased volatility over secondary markets because it is difficult to accurately gauge investor demand for a new security until several days of trading have occurred.
A bond that is issued by a blue chip company. These bonds are considered to be high grade, with little risk of interest payment interruption or default. |||This is the closest you can get to a government issue without actually buying one.
documents regulated by the Securities & Exchange Commission in which a public company outlines its methods and procedures. These documents are used to inform shareholders and solicit votes for corporate decisions, such as the election of directors and other corporate actions. Taobiz explains Proxy Materials SEC regulations require a public company to disclose specific information in its proxy materials, so that investors can be clear on the procedures to follow in certain circumstances. For example, a company's proxy materials must specify if there is a standard process for shareholders to contact the board of directors, and if one does not exist, the proxy materials must provide specific reasons for the absence of such a process.
A municipal bond backed by the credit and "taxing power" of the issuing jurisdiction rather than the revenue from a given project. |||General obligation bonds are issued with the belief that a municipality will be able to repay its debt obligation through taxation or revenue from projects. No assets are used as collateral.
A measure of a security's liquidity that is calculated by comparing the bid and ask prices quoted in the marketplace. The proportional spread is higher as liquidity decreases to compensate the dealer for the additional risk of creating a market in an illiquid security. The proportional spread is calculated as the difference between closing ask and bid prices divided by the average price of the bid and ask. Ask = Highest close in month Bid = Lowest close in month Also referred to as a proportional bid-ask spread. Taobiz explains Proportional Spread The proportional spread is used to give an idea of the average round-trip transaction compensation to dealers. The average transaction cost to the investor is calculated as one-half of the proportional spread. In general, proportional spreads can range from less than 1% to over 5%. For example, the average proportional spread on the New York Stock Exchange was 0.6% in 2003.
An alternative to cash or stock dividends. A property dividend can either include shares of a subsidiary company or physical assets such as inventories that the company holds. The dividend is recorded at the market value of the asset provided. Taobiz explains Property Dividend This type of payout structure is less common than the regular stock or cash dividend system. From a corporate perspective, property dividends can be distributed if the parent company does not wish to dilute its current share position or if it does not have enough cash on hand to distribute healthy payments.
A government debt obligation (local or national) backed by the credit and taxing power of a country with very little risk of default. |||This includes short-term Treasury bills, medium-term Treasury notes, and long-term Treasury bonds.
A proprietary trading group that usually trades electronically at a physical facility. Prop shops supply their traders with the education and capital resources to engage in a large number of deals each day. Taobiz explains Prop Shop The term "prop" is derived from a shortened form of proprietary. Prop shops are very similar to trading arcades. Both offer facilities where local traders can engage in electronic transactions and have access to the latest trading technology. However, there is a distinct difference in the trading operations between the two facilities. In a trading arcade, traders will transact for their own accounts. Prop shop traders trade for the firm's account using the shop's capital. By using the capital resources of the prop shop, traders gain access to more leverage than they would with an individual account.
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