Question

1. How do firms issue securities to the public?

2. What are the various types of orders investors can submit to their brokers?

3. Describe trading practices in dealer markets, specialist-directed stock exchanges, and electronic communication networks.

4. Compare the mechanics and investment implications of buying on margin and short-selling.

Answer 1

I can only answer 1 question at a time, so I am answering only question 1.

1. The most common way to issue securities to the general public is through Initial Public Offering (IPO). The primary market is the financial market where new securities are issued and become available for trading by individuals and institutions. Through an IPO, the company is able to raise funds by issuing shares.
Some other ways to issue securities to the general public are:

• Rights issue - When a company wants to raise more capital from existing shareholders, it may offer the shareholders more shares at a price discounted from the prevailing market price. The number of shares offered is on a pro-rata basis. This process is known as a Rights Issue.
• Preferential allotment - When a listed company issues shares to a few individuals at a price that may or may not be related to the market price, it is termed a preferential allotment. The company decides the basis of allotment and it is not dependent on any mechanism such as pro-rata or anything else.

Please do rate me and mention doubts, if any, in the comments section.