National Association of Securities Dealers Automated Quotations (NASDAQ)

NASDAQ Securities Brokers Dealers OTC Trading NYSE Financial Markets
A computerized system that provides brokers and dealers with price quotations for securities traded over the counter (OTC) as well as for many New York Stock Exchange-listed securities. NASDAQ quotes are published in the financial pages of most newspapers.
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Definition

The National Association of Securities Dealers Automated Quotations (NASDAQ) is a computerized system established to provide brokers and dealers with instantaneous price quotations for securities traded over the counter (OTC) as well as for many securities listed on the New York Stock Exchange (NYSE). NASDAQ was invented to offer a transparent and fast trading experience for securities investors and market participants.

NASADAQ was founded in 1971 and has become one of the largest stock exchanges in the world by market capitalization. It has prided itself on technology and innovation, boasting a largely digital marketplace.

Examples

  1. Apple Inc. (AAPL) - Apple shares are traded on NASDAQ, and its stock quotations can be accessed in real-time by brokers and dealers through the platform.
  2. Microsoft Corporation (MSFT) - Another major company listed on NASDAQ. Dealers and institutional investors frequently utilize the NASDAQ system to retrieve real-time stock prices.
  3. Alphabet Inc. (GOOGL) - The parent company of Google, whose shares are actively traded on NASDAQ.

Frequently Asked Questions (FAQs)

Q1: How does NASDAQ differ from the NYSE?

The primary difference between NASDAQ and the NYSE is that NASDAQ is a fully electronic exchange while the NYSE operates with a combination of a physical trading floor and electronic trading.

Q2: What are NASDAQ Composite Index and NASDAQ-100?

The NASDAQ Composite Index includes all the stocks listed on NASDAQ, offering a broad representation of the performance of the exchange. The NASDAQ-100 Index includes 100 of the largest non-financial companies listed on NASDAQ.

Q3: Can individual investors access NASDAQ directly?

No, individual investors cannot access NASDAQ directly. They must go through a broker or a trading platform that provides access to NASDAQ’s quotations and trading capabilities.

Q4: What are some key technological innovations by NASDAQ?

NASDAQ has pioneered several innovations, including electronic trading, which provides more efficient price setting and liquidity, and they have expanded into offering market data products and various trading services globally.

Q5: How are NASDAQ quotes published?

NASDAQ quotes are published through various financial news outlets, including the financial pages of most newspapers, and they are also available in real-time through various online trading platforms and financial websites.

  • Over the Counter (OTC) Trading: A decentralized market where securities are traded directly between parties without a central exchange.

  • NYSE: The New York Stock Exchange is the largest stock exchange by market capitalization and operates with a mix of a physical trading floor and electronic trading.

  • Stock Exchange: A marketplace where securities are bought and sold. Examples include NASDAQ, NYSE, and the London Stock Exchange (LSE).

  • Broker: An individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor.

  • Dealer: A person or firm in the business of buying and selling securities for their own account, whether through a broker or otherwise.

Online Resources

  1. NASDAQ Official Website
  2. Investopedia - NASDAQ
  3. Yahoo Finance - Stocks Prices
  4. Reuters Financial Markets
  5. SEC Edgar Database

Suggested Books for Further Studies

  1. “NASDAQ: A History of the Market That Changed the World” by Mark Ingebretsen
  2. “Electronic Exchanges: The Global Transformation from Pits to Bits” by Michael Gorham and Nidhi Singh
  3. “The Intelligent Investor” by Benjamin Graham
  4. “Flash Boys: A Wall Street Revolt” by Michael Lewis
  5. “Market Wizards: Interviews with Top Traders” by Jack D. Schwager

Fundamentals of NASDAQ: Financial Markets Basics Quiz

### When was NASDAQ founded? - [ ] 1965 - [ ] 1975 - [x] 1971 - [ ] 1980 > **Explanation:** NASDAQ was founded in 1971 as one of the first electronic stock exchanges in the world. ### What type of trading does NASDAQ primarily use? - [ ] Open outcry trading - [x] Electronic trading - [ ] Face-to-face trading - [ ] Auction trading > **Explanation:** NASDAQ primarily uses electronic trading, utilizing a computerized system to provide brokers and dealers with real-time price quotations. ### Does NASDAQ include OTC and NYSE-listed securities in its quotations? - [x] Yes - [ ] No - [ ] Only OTC - [ ] Only NYSE > **Explanation:** NASDAQ provides price quotations for both OTC (Over the Counter) traded securities and many NYSE-listed securities. ### Who can access NASDAQ directly to trade? - [ ] Individual investors - [ ] Institutional entities only - [x] Brokers and dealers - [ ] Market regulators > **Explanation:** Brokers and dealers can access NASDAQ directly to trade. Individual investors need to go through brokers or trading platforms. ### What do NASDAQ and NYSE have in common? - [ ] Both are fully electronic exchanges - [x] Both are major stock exchanges - [ ] Both have physical trading floors - [ ] Both only list American companies > **Explanation:** Both NASDAQ and NYSE are major stock exchanges, though their operation methods differ (NASDAQ is fully electronic, whereas NYSE combines floor and electronic trading). ### What are the components of the NASDAQ-100 index? - [ ] All NASDAQ-listed companies - [ ] Only financial companies - [x] Largest 100 non-financial companies on NASDAQ - [ ] The top 200 tech companies > **Explanation:** The NASDAQ-100 index comprises the largest 100 non-financial companies listed on NASDAQ. ### What kind of technologies has NASDAQ pioneered? - [x] Electronic trading - [ ] Blockchain trading - [ ] Face-to-face trading - [ ] Open outcry trading > **Explanation:** NASDAQ has been a pioneer in electronic trading technologies, ensuring efficient price setting and liquidity. ### Are NASDAQ price quotes available online? - [x] Yes, in real-time - [ ] Only in newspapers - [ ] No, only offline - [ ] Only through financial advisors > **Explanation:** NASDAQ price quotes are available online in real-time, accessible through various websites and trading platforms. ### What do brokers and dealers use NASDAQ for? - [x] To get real-time price quotations - [ ] To receive government bonds - [ ] To access private equity funds - [ ] To buy insurance products > **Explanation:** Brokers and dealers use NASDAQ to get real-time price quotations for securities traded over the counter and NYSE-listed securities. ### What makes NASDAQ unique among stock exchanges? - [ ] It has the oldest trading floor - [ ] It doesn't use computers - [x] It is fully electronic - [ ] It only lists technology companies > **Explanation:** NASDAQ is unique as it is one of the first and largest fully electronic stock exchanges, unlike other exchanges that use a combination of physical trading and electronic systems.

Thank you for engaging with our detailed article on NASDAQ. By completing the included quizzes, you now have a robust understanding of how this key financial marketplace operates!

Wednesday, August 7, 2024
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