Table of Contents |
| Introduction | xv |
Chapter 1 | The Stock Market: What the Stock Market Has to Offer | 1 |
| | Why Stocks Are Offered | 1 |
| | The Size of the Stock Market | 2 |
| | A Word About Bonds | 3 |
| | Why Individuals and Institutions Buy Stocks | 3 |
| | Dividends | 4 |
| | Capital Gains, or Growth | 5 |
| | Short Selling | 6 |
| | Risks and Rewards of Investing | 8 |
| | Common Stocks | 10 |
| | Preferred Stocks | 12 |
| | Stock Rights | 17 |
| | Stock Warrants | 18 |
| | Summary | 18 |
Chapter 2 | Reading the Financial Press: Determining Share Value, Determining Your Investment Return | 20 |
| | Cash Accounts | 20 |
| | Margin Accounts | 21 |
| | Security Positions: Long, Short, Flat | 23 |
| | Pricing Stocks: Points and Fractions | 25 |
| | The Figuration of Current Yield | 27 |
| | Newspaper Listings | 28 |
Chapter 3 | The Initial Public Offering: Getting the Stocks to the Marketplace | 32 |
| | The Primary Market--How Busineses Are Capitalized | 34 |
| | Incorporating the Business | 35 |
| | The Initial Public Offering (IPO) | 40 |
| | After the Offering Is Completed | 54 |
Chapter 4 | Inside the Brokerage Firm: Who Does What? | 55 |
| | Full Service Versus Discount | 57 |
| | Selecting a Brokerage Firm and an Account Executive | 62 |
| | The Sales Assistant | 66 |
Chapter 5 | The Secondary Market: Executing Orders on the Exchange Floor | 68 |
| | The New York Stock Exchange | 68 |
| | Listing Requirements and Criteria of the NYSE | 69 |
| | NYSE Maintenance Listing Requirements/Delisting from NYSE | 71 |
| | The NYSE Floor | 72 |
| | The Delivery of Orders to the NYSE: Superdot and the Broker Booth Support System | 78 |
| | NYSE's Online Comparison System | 80 |
| | The Auction System | 80 |
| | How Orders Are Executed in the Crowd | 83 |
| | Crossing Stock | 88 |
| | After (Off) Hours Trading--A/K/A Crossing Sessions | 89 |
| | The Short Sale | 91 |
| | Institutional Trades | 93 |
| | Decimalization | 95 |
| | Other Important Features of the NYSE | 95 |
| | AMEX--The American Stock Exchange | 101 |
Chapter 6 | The Specialist: Riding the Bulls and Bears | 105 |
| | The Specialst's Role: As Dealer, as Broker | 106 |
| | The Role of Automation and Telecommunication | 110 |
| | Other Duties of the Specialist | 112 |
| | Odd-Lot Trading | 116 |
| | Assigning Securities to the Specialist | 120 |
| | Conclusion | 121 |
Chapter 7 | The Secondary Market: Over-the-Counter Trading | 122 |
| | Following an Order Being Executed OTC | 126 |
| | The Over-the-Counter Bulletin Board: OTCBB | 130 |
| | Types of Orders | 133 |
| | Compliance Regulations of the NASD | 135 |
| | NASD Rules of Fair Practice | 137 |
Chapter 8 | The Nasdaq: Ongoing Changes | 140 |
| | NASD: National Association of Securities Dealers, Inc. | 140 |
| | Requirements for Securities to Become Listed on Nasdaq | 142 |
| | November 1998 Merger with the American Stock Exchange | 146 |
| | Nasdaq-100 Index Tracking Stock (AMEX Symbol QQQ) | 147 |
| | The Major Nasdaq Stock Market Indexes | 147 |
| | Expansion of Nasdaq Worldwide: Globalization of Stock Trading | 149 |
| | Monitoring the Markets | 150 |
| | Other Major Developments with the Nasdaq | 151 |
| | Conclusion | 158 |
Chapter 9 | Investment Companies: Closed-End and Open-End Funds--The "Package Plan" Approach | 159 |
| | Investment Companies | 160 |
| | Management Companies: Closed-End and Open-End Funds | 162 |
| | Pricing a Closed-End Fund | 163 |
| | Pricing an Open-End Fund | 163 |
| | Variety of Types of Open-End (Mutual) Funds for Bonds | 168 |
| | Conclusion | 169 |
Chapter 10 | Stock Options: Multipurpose Instruments | 170 |
| | The OCC and the Exchanges That Offer Option Trading | 171 |
| | Options: A Definition and Explanation of How Stock Option Contracts Generally Function | 172 |
| | Types of Option Contracts: Puts and Calls | 176 |
| | Option Premium: The Price of the Option Contract | 182 |
| | Options as a Hedging Tool | 190 |
| | Miscellaneous Option Topics | 192 |
| | Conclusion | 193 |
Chapter 11 | The Back Offices: Following the Long Paper Trail | 194 |
| | The Depository and Clearing House | 196 |
| | The Order Department | 198 |
| | P&S Department | 199 |
| | Margin Department | 206 |
| | Stock Record Department | 210 |
| | Accounting Department | 212 |
| | Dividend Department | 214 |
| | Proxy Department | 218 |
Chapter 12 | Stock Market Theories: Can Prices Really Be Predicted? | 220 |
| | The First American Analyst | 222 |
| | The Analysts | 231 |
| | The Technical Approach | 241 |
Chapter 13 | Analyzing Stocks: The Corporation's "Report Card" | 260 |
| | Current Assets and Current Liabilities | 261 |
| | Can the Corporation Pay Its Way? | 262 |
| | Using Debt and Capital Structure of a Corporation as Sources of Long-Term Funds | 263 |
| | The Income Statement | 264 |
Chapter 14 | Online Trading in the Stock Market: How Technology Has Changed the Financial Landscape | 269 |
| | Brokerage Firms in the World of Online Trading | 270 |
| | How an Investor Establishes Online Trading | 273 |
| | Wireless and Touch Tone Trading | 274 |
| | The Risks of Online Trading | 275 |
| | Protection for Online Investors | 279 |
| | Conclusion | 281 |
Chapter 15 | Globalization of the Stock Market: Expanding Opportunities for Investors | 282 |
| | Stock Markets Around the World | 283 |
| | Global Investing | 286 |
| | Effect of Extended / After-Hours Trading on Globalization | 287 |
| | Globalization: The Stock Exchanges | 288 |
| | Brokerage Firms and Online Access | 292 |
| | Conclusion | 293 |
Chapter 16 | Taxation: How Dividends and Capital Gains Are Taxed | 294 |
| | The Taxation of Interest | 295 |
| | The Taxation of Dividends | 295 |
| | The Taxation of Capital Gains | 296 |
| | Multiple Positions | 297 |
| | Stock Gifts to Minors | 298 |
| | Stocks Received as Gifts and Inheritances: Taxable Amounts and Basis | 298 |
Chapter 17 | In the Tank or, Even Worse, Crash, but Then a Reversal: How the Stock Market Works Under Pressure | 303 |
| | The Fair and Orderly Market | 306 |
| | Program Trading Myths | 313 |
| | The Global Crash | 314 |
| | The Stock Market and the Economy | 317 |
| | Conclusion | 319 |
| Glossary | 320 |
| Index | 399 |
| About the Author | 423 |