Dividends & Stock Splits
•These reduce the firm's assets and are paid from earnings.
What are cash dividends?
This is desirable when analyzing stocks using P/E and price/sales.
What is low P/E and low price/sales?
This happens to mutual fund capital gains and income.
What is they are distributed?
This index includes large-cap NYSE and Nasdaq stocks.
What is the Russell 1000 index?
This measures a firm’s ability to make fixed payments like interest.
What is a coverage ratio?
This happens to the stock price when a stock is split 2-for-1.
What is it decreases?
This ratio compares net income to equity.
What is return on equity?
These funds exclude U.S. securities.
What are international funds?
This type of investment company has a fixed capital structure.
What is a closed-end investment company?
As this ratio increases, interest payments become more assured.
What is times-interest-earned?
This causes the stock’s price to fall when it increases.
What is the risk-free rate?
This measures the speed of collecting accounts receivable.
What is days sales outstanding?
Mutual funds with beta > 1.0 have this kind of risk.
What is more systematic risk?
An index fund limits its holdings to this type of stock pool.
What are stocks in aggregate indexes?
These three items are needed to determine realized return.
What are income, cost, and sale price?
This happens immediately after a 10% stock dividend is paid.
What is retained earnings decrease?
A low value of this ratio may suggest a stock is undervalued.
What is price-to-sales ratio?
This is how mutual fund returns are calculated.
What is NAV change and distributions?
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These may sell at a premium to net asset value.
What are closed-end investment companies?
This historical average annual return is typical for large stocks.
What is 9–10%?
This is the immediate effect of a stock dividend on stock price
What is it falls?
These two elements determine a stock’s P/E ratio.
What are price and earnings?
Mutual funds in efficient markets are unlikely to do this consistently.
What is outperform the market?
This ratio is unaffected when accounts receivable are collected.
What is the current ratio?
This tax policy is a factor in a firm's dividend decisions.
What are corporate income taxes?