The Second Tier Securities Market SS2 Commerce Lesson Note

Small and medium-sized companies are usually unable to fulfil all the conditions required for a conventional listing on the Stock Exchange.

Therefore an alternative, the Second  Tier market with less stringent conditions and the entry requirements was introduced to enable such companies to raise funds through the capital market.

The SSM is an alternative market created to provide for the buying and selling of securities issued by small and medium-sized companies that are unable to meet the requirements for quotation on the main Stock Exchange.  

TERMINOLOGIES CONNECTED WITH THE STOCK EXCHANGE

1. Blue Chips: These are the best industrial shares associated with large nationally known companies. They give a safe and reliable return (e.g. dividends) and have growth potential in terms of share price appreciation and dividend income.
2. Right Issue: This is an offer of new shares to existing shareholders of a company who must pay for the additional shares being subscribed.
3. Cum  Div (i.e. Cum Dividend)  Meaning including dividend or with dividend that is, the purchaser of a stock termed cum div will be entitled to dividend when due.
4. Ex-Div (i.e. Ex-Dividend) Means the purchaser of a stock with such a term will not be entitled to the dividend. 

ASSIGNMENT

1. A person who buys shares hoping to resell at a higher price is called a (a) bull (b) bear (c) stag (d) broker

2. In a stock exchange transaction, the buyer is NOT entitled to the dividend when the stock is quoted (a) clean (b) ex-dividend © double-barreled (d) cum  dividend

3. Any member of the public who wants to buy shares in the stock market will first of all meet a/an (a) agent (b) broker (c) jobber   (d) shareholder

4. Government securities are described as gilt edge because they are (a) issued under tight security (b) owned by public corporations (c) traded on the stock exchange(d) regarded as safe to invest in.

5. When shares are sold cum-div, it means the (a) holder is entitled dividend (b) the holder cannot resell it. (c) stockbroker is entitled to the dividend (d) dividend is fixed