ACTSC371 Chapter Notes - Chapter 3: Market Liquidity, Nyse Arca, Pairs Trade
14 Apr 2016
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Primary market: new issue, assisted by underwriters (i. e. investment bankers/dealers, key factor: issuer receives the proceeds from the sale. Secondary market: exising owner sells to another party, issuing irm doesn"t receive proceeds and is not directly involved. Privately held firms: owned by relaively small number of shareholders. Max shareholders allowed is 499: fewer obligaions to release info to the public, shares are less liquid, thus investors pay less for them. Short form prospectus distribuion system (sfpds: reduces the underwriters risk and makes bought deals more atracive, prospectus: when the statement is inalized and approved by the commission. Underwriten vs best eforts : underwriten: irm commitment on proceeds to the issuing irm (bought deal, best eforts: no irm commitment. Negoiated vs compeiive bid: issuing irm negoiates terms with investment banker, compeiive bid: issuer structures the ofering and secures bids, negoiaion is more common.
