tailieunhanh - Lecture Focus on personal finance: An active approach to help you develop successful financial skills (2e) - Chapter 12

Chapter 12 - Investing in stocks. In this chapter, you will learn to: Identify the most important features of common and preferred stock, explain how you can evaluate stock investments, analyze the numerical measures that cause a stock to increase or decrease in value, describe how stocks are bought and sold. | 12 Investing in Stocks Stocks – shares of ownership in the assets and earnings of a business corporation. Common Stock – the most basic form of ownership of a corporation. Shareholder – the owner of a stock. Voting Rights – proportionate authority to express a choice in matters affecting the company. Proxy – written authorization given by shareholder to someone else to represent him or her and vote his or her shares at a stockholder’s meeting. 12- Objective 1 Identify the Most Important Features of Common and Preferred Stocks Two types of stock Common Stock- provides investors with an ownership interest in a corporation or (growth oriented) Preferred Stock- a cross between a stock and a bond (income oriented) On average, common stocks have outperformed all other assets over time Need to be patient and do research 12- Common Stock = most basic form of corporate ownership Stock = equity financing Reasons why corporations issue stock Raise money to start or expand business Pay ongoing business expenses Need not repay the money (like bonds) Dividends (distributions to shareholders) not mandatory Board of Directors votes each dividend payment But: Shareholders have voting rights; control of company Management must often make concessions Why Corporations Issue Common Stock 12- Investors can make money in three ways Income from dividends Dollar appreciation of stock value Price appreciation = capital gain Possible increased value from stock splits No guarantee price will go up after a split Stock Split – when the shares of stock owned by existing shareholders are divided into a larger number of shares; done to change (lower) price Example: 2:1- twice as many shares worth half as much A reverse stock split results in smaller number of shares. Example: 1:2- half as many shares worth twice as much Why Investors Purchase Common Stock 12- Dividend Dates Declaration Date = Board of Directors votes to pay a dividend (usually quarterly) Record Date = A . | 12 Investing in Stocks Stocks – shares of ownership in the assets and earnings of a business corporation. Common Stock – the most basic form of ownership of a corporation. Shareholder – the owner of a stock. Voting Rights – proportionate authority to express a choice in matters affecting the company. Proxy – written authorization given by shareholder to someone else to represent him or her and vote his or her shares at a stockholder’s meeting. 12- Objective 1 Identify the Most Important Features of Common and Preferred Stocks Two types of stock Common Stock- provides investors with an ownership interest in a corporation or (growth oriented) Preferred Stock- a cross between a stock and a bond (income oriented) On average, common stocks have outperformed all other assets over time Need to be patient and do research 12- Common Stock = most basic form of corporate ownership Stock = equity financing Reasons why corporations issue stock Raise money to start or expand business Pay .