Definition
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Stocks
- units of equity/ownership of a company
- buying a stock/share make you a legal part owner of a company.
- dividends are the earnings that a company shares to a shareholder.
- shareholders are the persons that receive earnings by owning a stock.
- the par value is the amount gained per share of the company.
- stock certificate is a document that shows the:
- company name,
- shareholder’s name,
- number of shares bought,
- the certificate number
- the par value
- stocks without a par value are called no-par stock.
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Bonds
- a certificate of debt whose repayment is agreed upon by the borrower and a lender.
- bondholders lend money to companies.
- they are also not involved in the company’s business.
- face value/principal/par value is the amount of money transferred by the bondholder to the company.
- coupon is the term used by the bond issuer for the periodic interest payment
Formulas
- Dividend per Share
- Dividend Amount
- Stock Yield Ratio
- Annual Coupon Amount
- Coupon Amount per Period