Finance Dictionary ( daily finance terms and concepts will be added and discussed)

Market Arbitrage
The simultaneous purchase and sale of the same security in different markets to take advantage of a price disparity between the two markets.
 
Market Capitalization
The dollar valuation of the total number of shares times the current price. This value is sometimes used by investors to classify stocks by size. It is not as reliable as classifying by sales dollar value because the price of a stock can be inflated by the market and not accurately representative of its size.
 
Market Maker
On the NASDAQ system, a broker-dealer willing to accept the risk of holding a particular number of shares of a particular security in order to facilitate trading in that security. There are over 500 member firms that act as NASDAQ Market Makers. One of the major differences between The NASDAQ Stock Market and other major markets in the U.S. is NASDAQ’s structure of competing Market Makers. Each Market Maker competes for customer order flow by displaying buy and sell quotations for a guaranteed number of shares. Once an order is received, the Market Maker will immediately purchase for or sell from its own inventory, or seek the other side of the trade until it is executed, often in a matter of seconds.
 
Market Maker Spread
The difference between the price at which a Market Maker is willing to buy a security and the price at which the firm is willing to sell it. Simply put, the Market Maker Spread is the difference between the bid and ask for a given security. Since each Market Maker can either buy or sell a stock at any given time, the spread is representative of the profit Market Maker makes on each trade.
 
Market Order
Also known as an Unrestricted Order. An order to buy or sell a stock immediately at the best available current price. A market order is the only order that guarantees execution.
 
Market Risk
The potential for an investor to experience losses owing to day-to-day fluctuations in the prices at which securities can be bought or sold. The Market Risk expresses the volatility of a stock price relative to the overall market as indicated by beta.
 
Market Surveillance
The department responsible for investigating and preventing abusive, manipulative, or illegal trading practices on The NASDAQ Stock Market. Considerable resources are devoted to surveilling The NASDAQ Stock Market. A vast array of sophisticated automated systems reviews each trade and price quotation on an on-line, real-time basis. Off-line computer-based analyses are conducted to evaluate trading patterns on a monthly, weekly, and daily basis.
 
Market Timing
An attempt to sell a stock or portfolio when a market is at a high and buying at a low, or an attempt to leave the market entirely during downturns and reinvesting when it heads back up. Requires a crystal ball to be effective, and is generally an exercise in futility.
 
Market Value
The price at which investors buy or sell a share of common stock or a bond at a given time. Market value is determined by the interaction between buyers and sellers.
 
Matching Orders
Simultaneously entering identical (or nearly identical) buy and sell orders for a security to create the appearance of active trading in that security. This violates the antifraud provisions of the Securities Exchange Act of 1934.
 
Material News
News released by a NASDAQ company that might reasonably be expected to affect the value of a company’s securities or influence investors’ decisions. Material news includes information regarding corporate events of an unusual and non*recurring nature, news of tender offers, unusually good or bad earnings reports, and a stock split or stock dividend.
 
Member
(1) Of the New York Stock Exchange: one of the 1,366 individuals owning a seat on the Exchange. (2) Of the National Association of Securities Dealers (NASD): any broker or dealer admitted to membership in the Association.
 
Member Firm
A broker-dealer in which at least one of the principal officers is a member of the New York Stock Exchange, another exchange, a self-regulatory organization, or a clearing corporation.
 
Merger
The combination of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.
 
Mid-Point
A method of calculating sales and EPS growth on a graph. It bases growth on averaged values. For 10 years of data, averages are calculated for the first and last 5 years. Each average determines a point between which an imaginary line is drawn to calculate the growth of the slope. For an odd number of years, the data is split so that the middle year is accounted in both averaged sums.
 
Monetary Policy
The actions of the Federal Reserve Board that determine the size and rate of growth of the Money Supply, which in turn affect Interest Rates.
 
Money Market
The securities market that deals in short-term debt. Money-market instruments are forms of debt that Mature in less than one year and are very Liquid. Treasury bills make up the bulk of the money-market instruments.
 
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