Owning Stocks
Completion requirements
This section discusses where stocks are traded and the difference between primary and secondary stock markets. You will become familiar with IPOs (initial public offerings), which are essentially when a company issues stock for the first time. IPOs are crucial for understanding the difference between primary and secondary markets. What are the different classes of rights that come from each type of stock?
Common Measures of Value
Key Takeaways
- Earnings per share (EPS) and dividends per share (DPS) indicate stock returns on investment.
- Dividend yield measures a shareholder's cash return relative to investment.
- Growth ratios such as the internal and sustainable growth rates indicate the company's ability to grow given earnings and dividend expectations.
- Market value ratios, most commonly price-to-earnings and price-to-book, indicate a stock's market popularity and its effects on its price.