Chapter 14 Investing Stocks Notes

Chapter 14: Investing stocks notes ⁃ A legal form that lists the issues to be decided at a stockholder meeting and requests that stockholders transfer their voting rights to some individual or initials called Proxy ⁃ The more time an investment must work, the more money it will money accumulate ⁃ companies choose to pay dividend to keep stockholders happy and prosperous. ⁃ Beginning investors must Find: Goad information and knows how to use it ⁃ Stock split? An event in which the shares of stock owned by existing stockholders are divided into a larger number of Shares ⁃ An advantage of being a preferred stockholder is the ability to receive cash dividend payments before common stockholders ⁃ Stacks that offer larger returns also include additional risk ⁃ Key element to investing to time ⁃ Most companies like to pay dividends to keep investors happy ⁃ The corporations must disclose corporate earnings, assets, liabilities, products or services and the qualifications of top management in a prospectus ⁃ Earnings per share is equal to after tax income divided by the number of outstanding shares of a firm’s common stock ⁃ A procedure in which the shares of stock owned by existing Stockholders are divided into a larger number of Shares is stack Split. ⁃ A dividend payout is the percentage of a firm's earnings paid to ⁃ Stockholders cash ⁃ • The percentage of a firm earnings paid to Stockholder in cash called dividend payout ⁃ Earnings per share and price earning, ratios are historical numbers ⁃ A total return is a calculation that includes that annual dollar amount of income as well as any increase or decrease in the original purchase price of the investment ⁃ The market to book ratio is computed as the current market value per Share of stack divided by the book value per Share of stock ⁃ The annual dollar amount of income generated by an investment divided by the investment's current market value called dividend yield ⁃ Security exchange is a marketplace Where member brokers who represent meet, buy, and sell as securities. ⁃ An investment practice based on the assumption that a stock's intrinsic or real value is determined by the company's future earning is fundamental analysis ⁃ • securities sold at a particular exchange must be first listed or accepted for trading ⁃ " An account executive also called a Stockbroker ⁃ ⁃ A market orders a request to buy or sell a stock at the current price ⁃ The sooner you invest, the longer your investment will have to grow ⁃ The buy and hold technique include the reinvestment of dividends ⁃ Market order is requested to buy or sell a stock at the current market value ⁃ the buy and hold technique increase value in what two ways dividends and stock value ⁃ the strategy of buying a stack hoping it will increase in value over time is buying long ⁃ Selling Short is selling a stock that has been borrowed from a brokerage firm and must be replaced later ⁃ A dollar cost averaging is a long-term technique used by investors who purchase an equal dollar amount of the same Stock of equal intervals ⁃ Options are the right to buy or sell a stock at a predetermined price during a specified period ⁃ A Stock issued by a corporation that has capitalization of between 12 and 10 billion is Known as what kind of stack? Mid cap ⁃ A corporation's earning divided by the number of outstanding shores of a firm's common Stock is earnings per Share. ⁃ The annual dollar amount of income generated by an investment dividend by the investment’s current market value is dividend yield ⁃ A primary market is a market in which an investor purchases financial securities via an investment bank or other representation from the issuer of those securities. ⁃ ⁃ A dividend yields the annual dollar amount of income generated by an investment divided by the investment's current market average ⁃ When purchasing a stock, the brokerage firm will usually charge a minimum commission between $5 and $25 ⁃ A marketplace where member brokers who represent investors meet to buy and Sell Securities is Securities exchange ⁃ A day trader is an individual who buys and then later sell stock and other securities in a very short period ⁃ An individual who buys and sells stock and other securities in a very short period is called a day trader. ⁃ Buying on margin is a technique whereby an investor borrows part of the money needed to buy a particular stock