Finance grill please!!?
if a firm increases its dividend by taking on risky investmentwhat happens to the P/E ratio?
P/E=payout ratio/ r-g r:return g:growth rate
I vote it doesn't change.
Answers: the P/E ratio is the marketplace price of the firm divided by its Earnings per share. It's market base so if a firm increases its div. normally the P/E ratio would rise because it is a sign that the firms yield will rise so you are willing to payment more for that investment (price rises). On the other hand, if the investors are aware of this 'risky' investment that could lower the P/E ratio, because they're scared to loose their investment.
How does one go about being a stock market trader?
Answers: All you need is a substantial amount of savings and some knowledge how to trade stocks profitably.
To accumulate your savings you need to work hard in whatever other occupation you have.
And to learn about trading stocks profitably you can start at a free website, such as http://www.investopedia.com/beginner.asp
This website even has a Stock Simulator which allows you to open a free account and practice trading stocks and stock options using virtual money.
That's a pretty broad question, like how does one go about being a doctor, or an engineer?
Learn something?
How do stocks work? what exactly ARE stock?
please provide me with adjectives the info you can.Answers: The prev answers are right, but I know that they are not really answering your real give somebody the third degree. To make $$$ on buying stocks, you stipulation to buy them when they are undervalued and get rid of them when they are overvalued. The hard division is determining whn to do either, so the assured way is to buy a few shares (a) time over a time span, next holding on to them for 3-5 years & then selling them stale in one and the same way (a few (a) time)/ this is call dollar cost averaging/ it's hard to seize the best price to buy or sell a stock, so when you buy it, you win a few shares once a while and as the price goes dwn, you acquire some more, then put on the market it off aftr a few year's surrounded by the same process. For example, lets read out u would like to take 100 shares of a specific stock & it's trading (a) $20, u buy 25 shares now; 25 more (a) 18, 25 more (a) 16 and consequently your last 25 (a) 14; your average price will be 20 + 18 + 16 + 14/ 4 = 17 / let say 1-2 years subsequently it's (a) $30, you sell 25 afterwards, 25 more (a) 35, 25 more (a) 40 & the last 25 (a) 45, so average selling price is 30 + 35 + 40 +45/ 4 = 37.5/ so u sort around $2,050 (the $1,700 it cost u to buy the stock - the $3,750 u made when u sold it). This does not take within accout the comistion to buy & sell the stocks or the levy u will owe to the Gov, or any Dividen payments you may of recived (if the stock pay's dividen's)..
Stock is a certificate, so to speak, of ownership contained by a business. It gives the owner several rights and benefits:
1. He is cut owner in the business he have paid for.
2. He have right to vote in how the business is run.
3. He have a right to a proportionate share in the profits made by the business, if the company issues "dividends".
So a share of stock give you part ownership short having to buy the entire business.
I hope this help.