NASDAQ Stocks and Overvaluation
This is an excerpt from the paper...
This is a question that is often asked by investment analysts and by some individual institutional investors. As will be argued in this paper, there are several implied questions within that question, each of which must be answered before the answer to the primary question can be offered. Those implied questions, which will also serve as the organizational structure for this discourse, are:2. How can a stock be listed on NASDAQ? 3. How are stocks typically valued? 4. Can these methods be applied to NASDAQ stocks? NASDAQ is an acronym form the National Association of Securities Dealers Automated Quotations stock market. NASDAQ is the world's first electronic stock market and the second largest stock market in the world. It is also the fastest growing stock market in the United States, and is a completely automated, OTC (Over The Counter (OTC) market. This automation means that NASDAQ relies on telecommunications and computer technology in its' operations. NASDAQ traces its history to 1961, when the U.S. Securities and Exchange Commission (SEC) conducted a special study of all securities markets. One of the findings, announced in 1963, was that the (OTC) securities market as fragmented and obscure. The SEC proposed that these markets could be automated, and instructed The National Association of Securities Dealers, Inc. (NASD) to comply. In 1968, the first computer architecture for the
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b site as "total assets (excluding goodwill) minus total liabilities."
Table 1 National and Small Cap Basic Requirements
Item
Nat. 1
Nat. 2
Nat. 3
Small Cap
Net Tangible Assets
$6 m
$18m
NA
$1-5m
Market Cap/Total Assets/Total Revenue
NA
NA
$75m
$5m
Pretax Income(last two fiscals)
$1m
NA
NA
NA
Public Float
1.1m
1.1m
1.1m
750k
Operating History
NA
2 years
NA
1 year
Market Value of Public Float
$8m
$18m
$20m
$1-5m
Minimum bid price
$5
$5
$5
$1
Round Lot Shareholders
400
400
400
400
Market Makers
3
3
4
2
Corporate Governance
Yes
Yes
Yes
Yes
Source: NASDAQ online at http://www.nasdaq.com
This table suggests that the requirements for a company to be listed on NASDAQ are less rigorous than those of the American or New York stock exchanges. NASDAQ has two other features that differ significantly from the older markets: 1) Advanced technology that is more in line with the rest of the exchanges in the world; and, 2) the Market Maker concept. Both of these make NASDAQ a more active exchange than either the New York Stock excha
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Some common words found in the essay are:
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Approximate Word count = 2102
Approximate Pages = 8 (250 words per page)
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