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Market organization, order instructions, and trading costs

Equity investments / equities · Lesson 1 of 5

Lesson 1 of 5

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Lesson 1 of 5 · Equity investments / equities

Market organization, order instructions, and trading costs

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Describe the functions of primary and secondary equity markets and distinguish key market participants, including brokers, dealers, exchanges, alternative trading systems, and regulators.
Compare major market structures and trading venues, including quote-driven, order-driven, brokered, and hybrid markets, and explain how these structures affect liquidity, price discovery, and execution quality.

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Explain common order instructions and trade handling mechanisms, including market orders, limit orders, stop orders, short sales, margin transactions, and time-in-force provisions, and determine when each is appropriate.

Calculate and interpret trading costs, including explicit costs, bid–ask spread costs, market impact, delay costs, and total transaction costs such as implementation shortfall.

Evaluate factors affecting market quality and best execution, including liquidity, transparency, immediacy, and the trade-off between execution certainty and price improvement.

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