How Does the NASDAQ Work?
NASDAQ is the term for National Association of Securities Dealers Automated Quotations. It is generally an exchange system that trades and prices numerous stocks. However, there are many investors that use the NASDAQ like an index, with the purpose of measuring how stocks (such as technology) are doing. NASDAQ is the second largest electronic display screen for the equity market within the United States of America. NASDAQ holds information for about 3,300 corporations. It trades more shares and keeps records for more companies than any other trading market within the U.S.
How Does NASDAQ Work?
NASDAQ is a computerized system that prices and exchanges stocks. Instant quotes are provided for securities because it does not need to rely on a trading floor, which is the customary way of practicing stock exchange and pricing. NASDAQ is also incorporated into the over-the-counter (OTC) stock market. Therefore, when buying and selling stock, a consumer's broker can enter the quotes and stock quote information for the chosen security into the computer. The computer finds the best price on the stock being considered and the business transaction is completed. NASDAQ stock pricing and exchange can also be performed via telephone, teletype or via a corporation's inventory account. Corporations and companies that desire to be listed on the NASDAQ system require at least 100,000 publicly held shares. Generally, they must also have at least a minimum of $1 million dollars in assets. In addition, the corporation being considered for NASDAQ participation must also have at least 500 shareholders in order to be listed. After the company has been approved and listed on NASDAQ, the company must maintain at least 300 shareholders to remain in their position on the NASDAQ system.
NASDAQ and the 100 Index
The NASDAQ 100 Index is a combination of all the largest non-financial companies and institutions that are listed on the NASDAQ stock market system. The index has been published since 1985. It helps investors and finance professionals to make investment and market decisions. The NASDAQ 100 Index entails all significant industry groups and is assessed and evaluated four times in a year. This assessment ensures that the index does not require re-balancing. The NASDAQ 100 consists of only securities that are listed under the NASDAQ National Market tier. Each individual security included on the index is assessed according to quantity or volume of trade as well as according to various other criterion, and the list of securities on the index is made public near December, on a yearly basis. The NASDAQ 100 is not to be confused with mini NASDAQ futures. These are options that allow investors to buy into NASDAQ at a particular date in the future. Futures and options are very popular among many investors due to their low risk factor and affordability.
