Here is some old answers if you want to draw from them.
Visit both the NYSE Homepage, and the NASDAQ Homepage, and write a paper of 2â?"3 pages on how the two exchanges operate. Make sure to address the following three questions:
How are NYSE and NASDAQ similar, if at all?
The NYSE and the NASDAQ are similar because of several reasons. Both are stock exchanges where equity is traded. Both, the NYSE and the NASDAQ provide increased marketability and ease of financing for the companies listed in those exchanges. In addition, the companies that are listed in each of NYSE and the NASDAQ inspire greater confidence in their customers, employees, and investors. Both, the NYSE and the NASDAQ enable transactions of shares and provides liquidity to the shares of companies. Both the exchanges allow shareholders to select the shares they want to buy and made the transactions. These exchanges are similar because they provide an insight into the economic activity in the country. Further, NYSE and the NASDAQ enable the shareholders to partake of the profits of firms from the economic activity. Both the NYSE and the NASDAQ use information technology for automated trading, and faster operation of the stock exchanges. The two exchanges impose certain listing requirements on the companies and this helps instill a degree of discipline on the companies listed on the two exchanges.
How are the two exchanges different from one another, if at all?
NYSE and the NASDAQ are different from one another because of several reasons. First, the size, according to 2009 figures, the market capitalization of shares listed on the NYSE was $19.2 trillion. Whereas, the market capitalization of shares listed on the NASDAQ was $3.7 trillion. So, the NASDAQ is a relatively smaller exchange. The other difference is that NYSE also allows an open outcry system that is operated by trading specialists. On the other hand the NASDAQ is purely a computer network based system. The other difference is the history of the two exchanges. NYSE started way back in 1792, whereas the NASDAQ was started in 1971. The difference is that the NASDAQ was started as a purely electronic stock exchange.
In the NYSE there are auction based transactions. It has seven specialist firm, and the traders meet on the floor of the exchange using person to person, electronic orders, or telephone order system. The auction results in the buying or selling of shares. On the other hand the NASDAQ has 300 market makers that use the electronic system to carry out transactions. The main difference is that in case of the NYSE, the specialist becomes an auctioneer, agent for investors, create interest in some securities, and rectifies imbalance between demand and supply. On the other hand the market makers of NASDAQ are investment firms that maintain inventories of securities and sell them to customers and other dealers. The market makers are required to give both a bid and ask price. There is more than one market maker for each stock.
What is The Public Company Accounting and Investor Protection Act of 2002? Describe the law in your own words.
The Public Company Accounting and Investor Protection Act of 2002 is commonly called the Sarbanes-Oxley Act. Essentially, the law was formulated in the aftermath of corporate accounting scams in which the US investors were losing faith in the securities market. To prevent an exodus of investors from the stock markets and to maintain the health of the stock exchanges, The Public Company Accounting and Investor Protection Act of 2002 was passed.
Since, the public and law makers were shocked by the scandals of Enron and WorldCom where off balance-sheet items were used to commit frauds, Section 401 set down requirements for disclosures in the off balance sheet items. Further, as during these scams there was a collapse of internal control, Section 404 required the management and the outside auditor to assess and report on the internal control of the companies. As during these accounting scams misleading financial statements were published, section 302 sets down strong internal procedures to ensure that accurate financial disclosure was made. During the Enron scam investigation, its auditors Arthur Andersen actually shredded and destroyed evidence. To prevent such occurrences in future, Sec 802 imposes criminal penalties for violations, mutilation, cover ups, and concealments of evidence. The act encourages whistle blowing and so Section 1107 imposes penalties for retaliation against whistle blowers. The Public Company Accounting and Investor Protection Act of 2002 sets up the PCAOB to oversee the enforcement, addresses the issue of auditor independence, and increases corporate responsibility.
www.wisegeek.com/what-is-nasdaq.htm - www.estockwise.com/estockwise.../nasdaq-definition.htm www.stockexchangesecrets.com/nasdaq.html www.investopedia.com ? Dictionary www.investorwords.com/.../New_York_Stock_Exchange.html www.onlinestocktrading.org/stocks/what-is-the-nyse/ www.fed-soc.org/publications/.../the-public-company-accounting-reform-and-investor-protection-act-of-2002-public-markets-and-government-o... www.govtrack.us ? Congress ? Legislation www.telaxion.com/pages/sox.php www.access.gpo.gov/.../senate05cl107.html - United States -