Ch 1: The Stock Market

1. 1.8 Stock Splits Ch 1: The Stock Market

2. Fractional Part of a Share • When there is less than one share remaining • when this happens, the corporation buys the fractional share at the current market price

3. Example 1 Steve owned 942 shares of Graham Corporation. On January 3, a 5-for-4 split was announced. The stock was selling at $56 per share before the split. How was Steve financially affected by the split?

4. Example 2 • Gabriella owned 1,045 shares of Hollow Corporation at a price of $62.79. The stock split 3-for-2. How was Gabriella financially affected by the split?

5. 1.9 Dividend Income • If shareholders own a corporation, are they entitled to some of the profits? • YES!!!! Shareholders are entitled to their portion of the corporation’s profit

6. If shareholders own a corporation, are they entitled to some of the profits? • A payment of a company’s earnings to its shareholders is called a dividend. • Money received from dividends is called dividend income • Dividends are paid annually or quarterly • Your total number of dividends is based on the number of shares you own • Stocks that pay dividends are called income stocks because they provide their owners with income • Not all stocks are income stocks

7. If shareholders own a corporation, are they entitled to some of the profits? • Yield of stock – the percent value of the dividend compared to the current price per share • Investors use yield to compare their dividend income to the interest they could have made if they put the money in the bank instead of buying the stock • Stocks that are bought low and sold high are called growth stocks

8. If shareholders own a corporation, are they entitled to some of the profits? • Stocks can be classified as preferred stock or common stock • Preferred stockholders receive a set dividend which does not frequently change • Common stockholders receive dividends only when the board of directors elects to issue these dividends • Preferred stockholders receive dividends before common stockholders

9. Example 3 • Roberta is considering purchasing a common stock that pays an annual dividend of $2.13 per share. If she purchases 700 shares for $45.16 per share, what would her annual income be from dividends? • Jacques purchased x shares of a corporation that pays a y dollar annual dividend. What is his annual dividend income, expressed algebraically?

10. Example 4 • Elyse owns 2,000 shares of a corporation that pays a quarterly dividend of $0.51 per share. How much should she expect to receive in a year?

11. Ch 1 Asnmt 9 • Pg 50 #8-12 • Pg 55 #1-7