Name: Teng, Renyi Student ID: 1345901 MBA 560

Q 2.2 Why do you think some large, well-known companies such as Cisco Systems,
Intel, and Microsoft prefer to trade on the Nasdaq National Market rather than on
a major securities exchange such as the NYSE (for which they easily meet the
listing requirements)? Discuss the pro and cons of listing on a major securities
exchange.
a. Because the Market entry threshold and the cost of financing on the
Nasdaq National Market is lower. And the regulation of Nasdaq National Market is
not strict. Going public on Nasdaq National Market only need 18 months from the
creation of a company to operation that can shorten the listing process. Generally
high-tech enterprises can choose the Nasdaq, other enterprises will choose the
NYSE exchange.
b. Discuss the pro and cons of listing on a major securities exchange.
Advateges: (1) It can attract more investors to the company to ensure that its
shareholders can obtain adequate liquidity. (2) Company can receive the authority
researchers and securities’ analysis that can improve the image of the company.
(3) U.S. regulators implement the strictest information disclosure system and
corporate governance standards that can improve the company's reputation.
Disadvateges: (1) the cost of Initial public offering is very high. (2) Adhere to
the continuous financial disclosure and reporting obligations. (3) Bearing legal risk
and lawsuit risk.
Q 2.4 Critics of longer trading hours believe that expanded trading sessions turn
the stock market into a casino and place the emphasis more on short-term gains
than on long-term investment. Do you agree? Why or why not? Is it important to
have a “breathing period” to reflect on the day’s market activity? Why are smaller
brokerages and ECNs, more than the NYSE and Nasdaq, pushing for longer trading
hours?
a. yes. I agree to expand the trading sessions, because it can improve the
effciency of the usage of money on capital market.
 b. It is important to have a “breathing period” to reflect on the day’s market
activity. Longer trading hours can increase investors more opportunities to gain
benefits from capital market, it gave them enough time to make actions.
Q 2.5 Describe how, if at all, conservative and aggressive investors might use each
of the following types of transactions as part of their investment programs.
Contrast these two types of investors in view of these preferences.
a. Long purchase
b. Margin trading
c. Short selling
a. Conservative Investors may use long purchase, and think about that the
stock price is expected to be bullish in the stock market, so buying stocks, while at
a low price for stocks rose to a certain price to sell, in order to get balance benefit.
b. Aggressive investors might use short selling. They think about that
although the current share price is higher, but the stock market prospects looks
bad, share price is expected to fall, then they borrowed stock sold in time, waiting
the share price has dropped to a level, and then buying again, in order to get
balance benefit.
c. Aggressive investors might use margin trading
P 2.7 Assume that an investor buys 100 shares of stock at $50 per share, putting
up a 60% margin.
a. What is the debit balance in this transaction?
Debit balance: 100 * $50 = $5000, $5000 * (1-60%) = $2000
b. How much equity capital must the investor provide to make this margin
transaction?
Equity capital :$5000 * 60%= $3000