Business Math

• Business Math
• Secondary Education

One unit of ownership of a corporation.

1. Publicly held corporation
2. Publicly traded
3. Shares
4. Stock or equity

CHAPTER 

BUILDING WEALTH THROUGH INVESTMENTS

The daily prices of stocks, along with other information about the companies, are reported on the Internet and in some newspapers. Most print media are migrating to the Internet. Some of the best sources that still provide both are The New York Times, Barron’s Weekly, and The Wall Street Journal. In Table 15-1, we look at listings from The Wall Street Journal Online to see how to read stock listings.

(a)How many shares of AFLAC, Inc., or AFL were traded this day?
(b) What is the difference between the high price and low price of the day?
(c) What was the closing price the previous day?

How to calculate the closing price the previous day?

1. Low- Average
2. High- Average
3. Low-High
4. High- Low

Find the current yield for a stock that has an annual dividend
per share of $1.56 and a closing price per share of $27.98.

Current Yield

Current Yield =

Annual dividend per share/closing price per share * 100%

Find the current yield for a stock that has an annual dividend per share of $1.56 and a closing price per share of $27.98.

1. 5.23
2. 5.57
3. 5.46
4. 5.36

A company has issued 20,000 shares of cumulative preferred stock

that will earn dividends at $0.60 per share and has issued 100,000 shares of common stock. Last

year the company paid no dividends. This year $250,000 is available for dividends. How are the

dividends to be distributed?

Preferred stockholders received no dividends last year, so this year’s dividends in arrears must be paid:The remaining money is distributed to the preferred and common stockholders for this year as follows:

Calculation 

The amount left for common stockholders is divided among all the common stockholders:

Dividends in arrears: 20,000($0.60) = $12,000 To preferred stockholders

The remaining money is distributed to the preferred and common stockholders for this year as follows:

To preferred stockholders: 20,000($0.60) = $12,000

The amount left for common stockholders ($238,000 - $12,000 = $226,000) is divided among all the common stockholders:

To common stockholders:$226,000/100,000 = $2.26 per share

American Transit Company has 100,000 shares of common
stock held by stockholders and paid $0.32 per share in
dividends. How much was paid out in dividends?

$32000

If AFL (Table 15-1) had 989,532,000 shares of common
stock outstanding when it paid dividends last year, how
much did it pay in dividends?

1. 1.12
2. 1.21
3. 2.31
4. 1.32

Give the summary of the lesson