Advantages And Disadvantages Of Investing

The disadvantage of investing in shares is that they earn dividends in residual basis after all other bond holders and preference shareholders are paid.

When a company decides to pay dividends, it has to be careful on how much it will be given to the shareholders. It is of no use to pay shareholders dividends

announces that dividends at the end of the year will increase? What if the required rate of return increases? What changes in dividends will affect the stock price and how?

“When a company issues additional shares, this reduces an existing investor’s promotional ownership in that company” (Diluted Earnings Per Share - Diluted EPS. (2015)) This means that in the case were we found the earnings per share of a company to have decreased as new capital was raised; it led to the investor’s share to have decreased as well, because now, instead of having say 10% of ownership in a company; but because more shares are added so that the company can raise capital, the ownership decreases (unless the investor buys all the additional shares) to say 5%.

Explain why you think these particular investments would be good choices. (3-6 sentences. 3.0 points) Investing in stock shares that may pay me a good amount later I the future. Also I would invest in a new company to get them on their feet so they can start to gain money. I would also want to invest in a savings account that would pay me over time.

The stock market is a great way to buy part of a company & gain or loose money depending on how the company is making money buy buying a share. “The stock market is owning a small piece of the company; the stock market is owning a piece of a business” (Christie 5). Therefore, investing in the stocks is a great idea when prices are high. Furthermore, it is a hard job to keep up with everything needed to know for the job. Investors and brokers are the one who do the buying

When deciding whether or not you want to invest in a company one important ratio is the price earnings ratio. In Fitbits annual report for 2014 their price earnings ratio was 42.4 and in 2015 it was 33.63. You may say these two numbers mean nothing but in fact it is a good sign that in 2015 the number has lowered. The reason for that is as a new, first time investor, it isn’t always the best to place

There are a lot of companies worth investing in around the country and the world. An investor cannot simply put his money into a company without doing some research beforehand. Using ratios, balance sheets, income sheets, and other financial information, a potential investor has a lot of resources to use to ensure a good investment is made.

In looking for a value/bargain stock, the fundamentals, metrics, and/or indicators that I would look for in a firm is the past performance of the firm in recent years, whether the firm is making money and if they are reinvesting it back in the company, and if the balance sheets show that they have a good about of assets. Benjamin Graham looks for a future in a firm. He looks at the market as one like you would a business partner. One who would offer to buy you out or sell you his interest daily. He refers to this person as “Mr. Market” (Investopedia).

Dividends are payments made by a company to its shareholders during a specified time intervals, say, quarterly or yearly. It is the portion of corporate profits paid out to stockholders. When a company earns money out of the business, that money can be put to two uses: it can either be re-invested in the business or it can be paid to the shareholders. This payment is called dividend.

The purpose of this case is to have students examine dividend policy--cash dividends, stock splits, and stock dividends--from the viewpoint of its effect on corporate share prices.

There are a few terms new stock investors should learn before actually beginning to put money into the stock market. You hear words like “shares”, “assets”, and even “earnings” when you watch or listen to people on the television. Shares are a percentage of the company, if you buy a share; you own a small percentage of it and its earnings. Earnings are all the money that the company makes. Assets involve all the company owns, for example, trademarks, equipment, and even the buildings their workers work in. Companies put their assets and

There are two ways of increasing capital, (1) using debt and (2) issuing new shares. For profitable companies sometimes it is cheaper to use debt instead of issuing new shares since cost of debt is tax shielded. In this case company didn’t have any debt in past which means less default risk, it will affect total value in a positive way. It will decrease the taxes paid and increase net income, accordingly share values.

It has the option to distribute the cash in the form of dividends. Shareholders were taxed on cash dividends at ordinary income rates whereas gains realized on shares that were repurchased received capital gains treatment.

Stocks (or shares), by definition, are shares of ownership in a company. By purchasing stocks in a company, the investor becomes a part owner, and thereby owns a percentage share of the company’s after tax profits. Stocks/shares have two key characteristics: 1) they can be issued in small denominations: an investor can purchase as many or as few shares in a company as he/ she wants, thereby becoming a