Amex, Nasdaq, And Worldcom

1. How are AMEX and NASDAQ similar, if at all?

The American Stock Exchange and the NASDAQ are both examples of financial market trade organizations. These two entities are vehicles that provide an avenue or marketplace for surplus economic units and deficit economic units to participate in financial trading.

The American Stock Exchange is a marketplace for an array of financial products such as stocks, options, exchange traded funds, and structured products (amex.com, 2006). These products are traded through interactions of offers to sell and public bids to buy. All AMEX security trading is facilitated by a specialist who is stationed on the trading floor. These specialists must perform duties as facilitators, auctioneers, dealers, agents, and brokers' brokers in order to fulfill their obligations of assisting in fair and equitable trading to both buyers and sellers.

NASDAQ has made claims of being the largest and fastest growing major stock market in the world (nasdaq.com, 2006). NASDAQ also notes that it is the largest U.S. electronic stock market and trades more shares per day than any other U.S. market. This trade organization hosts stock exchange and trading for some very prestigious companies such as Adobe Systems, Scholastic Corporation, and JetBlue Airways. The NASDAQ market works to provide a high-technology market that is fast, reliable, highly transparent, and deeply liquid. Their goal is to be highly transparent so that all trades are visible and fair to all parties while the desire to keep trades liquid increases the ability for stock transactions to be traded as timely and efficiently as possible.

2. How are the two exchanges different from one another, if at all?

The American Stock Exchange is considered an order-driven continuous auction market where specialists facilitate continuous trading. The NASDAQ is based on a competing dealer system where each dealer continually posts firm bid and ask quotes on an electronic screen (stockmarketinvestinginfo.com, 2004).

Other differences exist between NASDAQ and AMEX concerning limit orders that can affect the speed of price adjustment. AMEX specialists can not trade ahead of limit orders at the same prices. This often results in their quotes reflecting the limit order books rather than the commitments by individual specialists. As a result, limit order prices are temporarily stale immediately after public announcements, which can delay revisions in the best bid and ask quotes. In contrast, dealers at NASDAQ are instructed to post firm bid and ask quotes for at least 1000 shares and are not allowed to rely on the limit orders of other investors.

1. How has the former WorldCom, Inc. Chief Executive Bernard Ebber's case affected WorldCom, Inc. and the Telecommunication industry?

The WorldCom debacle seriously wounded the telecom industry as it financially and ethically tripped the industry and WorldCom's

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