NASDAQ

NASDAQ Electronic Market Securities Trading Stock Exchange NASDAQ OMX National Association of Securities Dealers
NASDAQ, an electronic market for securities that began in 1971, has grown to become the largest stock market in the USA, listing more than 3000 companies. It was the first screen-based trading system to operate without a physical trading floor.
On this page

Introduction to NASDAQ

NASDAQ (National Association of Securities Dealers Automated Quotations) is a global electronic marketplace for buying and selling securities. Launched in 1971, NASDAQ was the world’s first electronic stock market platform, and it transformed the way securities were traded by eliminating the need for a physical trading floor.

Key Features of NASDAQ

  • All-Electronic Trading: NASDAQ was the first market to provide traders with electronic access to securities trading without a physical location.
  • Large Market Cap: It is the largest stock market in the USA by number of companies listed, exceeding 3000 companies.
  • Early Technology Adoption: Known for attracting tech giants and growth-oriented companies like Apple, Microsoft, and Google.
  • Listing Requirements: Companies must meet tough financial and liquidity requirements to be listed on NASDAQ.

Examples of Companies on NASDAQ

  1. Apple Inc. (AAPL): A pioneering technology company known for its innovations in consumer electronics, software, and online services.
  2. Microsoft Corp. (MSFT): A global leader in software, services, devices, and solutions.
  3. Amazon Inc. (AMZN): An e-commerce and cloud computing giant.
  4. Google (GOOGL): A technology company specializing in internet-related services and products.
  5. Tesla Inc. (TSLA): An electric vehicle and clean energy company.

Frequently Asked Questions about NASDAQ

What is NASDAQ?

NASDAQ is the world’s first electronic stock market platform, offering a digital avenue for securities trading, established in 1971 by the National Association of Securities Dealers (NASD).

How does NASDAQ differ from the New York Stock Exchange (NYSE)?

Unlike the NYSE, which operates with a trading floor and specialists, NASDAQ is a completely electronic exchange, enabling faster and more efficient transactions.

Which companies are typically listed on NASDAQ?

NASDAQ is renowned for its high concentration of technology and innovative companies, though it also lists companies from various other sectors.

How can a company list on NASDAQ?

Companies must comply with NASDAQ’s rigorous listing requirements, including financial minimums, corporate governance standards, and continued listing standards for market liquidity and management team integrity.

What is the NASDAQ-100 index?

The NASDAQ-100 is a stock market index made up of 100 of the largest non-financial companies listed on NASDAQ, celebrated for being a benchmark of technology and consumer services stocks.

  • Electronic Communication Network (ECN): A digital system facilitating the trading of securities outside traditional stock exchanges.
  • Market Capitalization: The total market value of a company’s outstanding shares of stock.
  • Initial Public Offering (IPO): The process by which a private company becomes publicly traded by offering shares for sale to the general public.
  • Over-the-Counter (OTC): A decentralized market where securities not listed on formal exchanges are traded through a dealer network.
  • NASDAQ Composite: An index of all the stocks listed on NASDAQ, often referenced to gauge the performance of technology and growth companies.

Online Resources

Suggested Books for Further Studies

  1. “Principles of Financial Accounting” by John J. Wild: A comprehensive guide covering the essentials of financial accounting.
  2. “The Intelligent Investor” by Benjamin Graham: A seminal work on investment strategies and market analysis.
  3. “Security Analysis” by Benjamin Graham and David Dodd: In-depth examination of investment and analysis methods.
  4. “Common Stocks and Uncommon Profits” by Philip Fisher: Techniques and strategies for stock investment.
  5. “A Random Walk Down Wall Street” by Burton G. Malkiel: An exploration of investment theory and practice.

Accounting Basics: “NASDAQ” Fundamentals Quiz

### How did NASDAQ revolutionize securities trading when it was first launched? - [x] By introducing all-electronic trading - [ ] By being the first market to trade only US stocks - [ ] By establishing the longest trading hours - [ ] By eliminating listing fees > **Explanation:** NASDAQ revolutionized securities trading with its all-electronic trading system, which did not require a physical trading floor, making the process more efficient and accessible. ### Which type of companies are most likely to be listed on NASDAQ? - [x] Technology and growth-oriented companies - [ ] Only financial institutions - [ ] Only large multinational corporations - [ ] Real estate firms > **Explanation:** NASDAQ is known for its focus on technology and growth-oriented companies, including leading firms like Apple, Microsoft, and Google. ### What was the primary advantage of NASDAQ's electronic trading system? - [ ] Higher transaction fees - [ ] Limited participation to select brokers - [x] Faster and more efficient transactions - [ ] Trading limited to U.S market hours > **Explanation:** The primary advantage was the speed and efficiency of transactions made possible by the all-electronic system, eliminating the delays inherent in floor-based trading. ### What year did NASDAQ begin operations? - [ ] 1961 - [ ] 1981 - [x] 1971 - [ ] 1991 > **Explanation:** NASDAQ began operations in 1971 as the first electronic stock market platform. ### What is the NASDAQ-100 index known for? - [x] Comprising 100 of the largest non-financial companies listed on NASDAQ - [ ] Comprising the top 100 financial firms globally - [ ] Listing all new IPOs on NASDAQ - [ ] Only listing tech companies > **Explanation:** The NASDAQ-100 index includes 100 of the largest non-financial companies listed on NASDAQ, prominently featuring technology and consumer services stocks. ### Which organization initially owned and operated Nasdaq? - [ ] Securities Exchange Commission (SEC) - [ ] Federal Reserve - [x] National Association of Securities Dealers (NASD) - [ ] New York Stock Exchange (NYSE) > **Explanation:** The NASDAQ was initially owned and operated by the National Association of Securities Dealers (NASD) until 2002. ### What distinguishes NASDAQ from other stock exchanges? - [x] It operates entirely as an electronic marketplace - [ ] It allows trading of commodities - [ ] It has the highest fees - [ ] It only lists start-ups > **Explanation:** NASDAQ is distinguished by its operation as a completely electronic marketplace, eliminating the need for a physical trading floor. ### When did NASDAQ acquire the Swedish exchange group OMX? - [ ] 2000 - [ ] 2002 - [x] 2008 - [ ] 2010 > **Explanation:** NASDAQ acquired the Swedish exchange group OMX in 2008, further expanding its global reach and capabilities. ### NASDAQ listing requirements are considered: - [x] Rigorous and stringent - [ ] Flexible and minimal - [ ] Easier than NYSE - [ ] Irrelevant for technology companies > **Explanation:** NASDAQ's listing requirements are known to be rigorous and stringent, ensuring that listed companies meet high financial and corporate governance standards. ### Can a company listed on NASDAQ trade its stocks outside of the United States? - [ ] No, only within the US - [ ] Yes, but only with special permission - [x] Yes, NASDAQ companies often trade globally - [ ] No, NASDAQ trades are restricted to North America > **Explanation:** Companies listed on NASDAQ often trade globally, taking advantage of electronic trading networks and international markets.

Thank you for exploring our comprehensive guide to NASDAQ and tackling our quizzes. Keep excelling in your financial understanding!

Tuesday, August 6, 2024
National Advertising
Name Position Bond
Dual-Capacity System January 1, 1
NYSE Euronext January 1, 1
Secondary Market January 1, 1
Secondary Market January 1, 1
Shanghai Stock Exchange (SSE) January 1, 1
Stock Exchange January 1, 1
Tokyo Stock Exchange (TSE) January 1, 1
Trading Halt January 1, 1
Trading Post January 1, 1
Unlisted Security January 1, 1

Accounting Terms Lexicon

Discover comprehensive accounting definitions and practical insights. Empowering students and professionals with clear and concise explanations for a better understanding of financial terms.