Closed-End Investment Company
issues a specified number of shares that can be traded on the exchange
Open-End Investment Company
mutual funds
accepts additional funds and repurchase shares directly from investment
Exchange Traded Funds
shares are traded on exchanges
sponsor identifies a portfolio of assets in which to invest
low cost, transparent, diversification
Pension Funds
established by U.S. employers to facilitate and organise investment of employees retirement funds
Private Equity
asset managers who make equity investment in companies that are not publically traded
Hedge Funds
- unregistered private funds that allow investors to pool their investment assets
- invest in assets when other institutions are prohibited
- conduct short sales and derivatives to profit from market downturns and arbitrageurs
Buy orders convey more information than sell orders
- liquidity needs drive many sales
- larger pool of stocks in which to buy than to sell
- restrictions on short selling
- funds cannot borrow to invest
Stealth Trading
privately informed traders fragment their large order, routing them to different markets at different times to disguise intentions
- large trades will reveal information
- small trades will incur excessive transaction costs
- medium trades will be used by informed traders
Institutions prefer small and medium transactions when trading on high volume days
TRUE
When volatility increases, stealth trading decreases
Stealth trading increases when liquidity is high
Sunshine Trading
traders announce intentions
attempt to attract more liquidity providers to the market
if trades are not information given, you may get better prices
Block Trades
Off book transactions
- orders are not displayed in limit order book before matching
- once trades are executed they are usually reported to the stock exchange
