BUS 629 W4D1

.docx

School

Ashford University *

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Course

629

Subject

Finance

Date

Apr 3, 2024

Type

docx

Pages

1

Uploaded by cc0909n on coursehero.com

W4D1 Security markets started as a centralized trading location that traded securities in an auction format. The largest of these exchanged that continues to have a physical location is the New York Stock Exchange (NYSE) (Block, et. al., 2022). When thinking of the NYSE, my mind always goes back to videos of brokers yelling back and forth acting as agents for buyers and sellers. While this can be exciting, it is inefficient. NASDAQ was created as an electronic stock exchange known for trading in technology stocks. NASDAQ has evolved over the years from just equities to options as well by acquiring the Boston and Philadelphia Exchanges. It also now owns three Canadian, four Nordic, and three Baltic exchanges (Block, et. Al., 2022). The requirements to be on the NASDAQ are lower than NYSE so many newer companies start their listing on NASDAQ. The Chicago Mercantile Exchange (CME) started in 1898 as the Chicago Butter and Egg Board (Block, et. al., 2022). This is where you would go if you had physical products to sell. It also allowed a buyer to lock in a price for “future” purchases. Over the years, the product available on the exchange grew dramatically, and shortly after 1972, currency futures were born (Block, et. al., 2022). As industries continued to grow and expand into international markets, it became important for companies to trade on foreign exchanges also. This all led to the creation of Electronic Communication Networks (ECN). The ECN can act as a broker-dealer or as an exchange to match orders between buyers and sellers (Block, et. al., 2022). There is no physical trading floor and if a company wishes to trade on the exchange, they must subscribe. The efficient market hypothesis has three forms. The first is the weak form. This indicates past information has no effect on future pricing. The semi strong form feels that all current public information is reflected in the price, while the strong form believes the price reflects all public and nonpublic information (Block, et. al., 2022). Ironically the strong form is illegal due to insider information. Dark pools match up buyers and sellers without making the trade public knowledge (Block, et. al., 2022). There are arguments both for and against this type of trading. The ones that are for this type of trading believe prices become more efficient and discourages high-frequency traders from entering the market. These against the process believe it makes the markets less liquid and that pricing can be more inefficient without all the public knowledge. Rivian is an electronic vehicle maker that raised $2.5 billion in private equity to T. Rowe Price in 2020 (Kunthara, 2021). According to Yahoo (2024), 28.52% of shares are held by insiders while 52.37% are held by institutions. The largest being Amazon.com at 16.54% followed by T. Rowe Price at 10.14% with Vanguard Group rounding out the top three at 7.13%. Not surprisingly, the top five mutual fund holdings are T. Rowe Price and Vanguard (Yahoo, 2024). Block, S. B., Hirt, G. A., & Danielsen, B. R. (2022). Foundations of financial management (18th ed.) . Kunthara, S. (2021, February 4). These were the largest funding rounds of 2020 . Crunchbase News. https://news.crunchbase.com/venture/largest- funding-rounds-of-2020/#:~:text=These%20Were%20The%20Largest %20Funding%20Rounds%20of%202020,8%20Epic%20Games%3A %20%241.53%20billion%20...%20More%20itemsLinks to an external site. Yahoo! (2024, February 25). Rivian Automotive, inc. (RIVN) stock major
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