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The Danger of Banks Engaging in Activities Such as Trading

question 75

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The danger of banks engaging in activities such as trading in financial futures and interest-rate swaps is that these activities allow banks to


Definitions:

Reverse Split

A reverse split is a stock market maneuver in which a company reduces the number of its existing shares to increase the share price without changing the company's market capitalization.

Information Content Effect

The impact of news or information release on the price and trading volume of securities.

Stock Split

A corporate decision to fragment its current shares into additional shares to raise the market fluidity of the shares.

Clientele Effect

A theory suggesting that the types of investors attracted to a company depend on the company's dividend policy and related tax treatments.

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