Bài giảng môn học Quản trị kinh doanh - Chapter twenty: One stocks, bonds, and mutual funds

STOCKS, BONDS, AND MUTUAL FUNDSChapter Twenty OneCopyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinRead, calculate, and explain stock quotations.Calculate dividends of preferred and common stocks; calculate return on investment.LU21-1: StocksLearning unit objectivesLU 21-2: BondsRead, calculate, and explain bond quotations.Compare bond yields to bond premiums and discounts.Explain and calculate net asset and mutual fund commissions.Read and explain mutual fund quotations.LU 21-3: Mutual FundsCumulative preferred stock – entitles its owners to a specific amount of dividends in 1 yearStock – shares of ownership in a companyCommon stock – stock that allows owners to have voting rightsStocksPreferred stock – does not allow voting rights, but gives preference over common stockholders in dividendsStocksDividends – payments to shareholders from profitDividends in arrears - payments owed to cumulative preferred shareholdersStockholdersElectBoard of DirectorsElectOfficers of CorporationHow Stocks Are Traded?Stockbrokers – People who buy and sell stock on the floor of the exchanges; they charge a commission for trading stocksStock exchanges – an orderly trading place for stockStock Quotations in Newspapers Closing price per share of stock Annual earnings per share Earnings per share = Annual earnings Total number of shares outstandingStock Quotation Calculations Annual dividend per share $1.21 Today’s closing price per share $39.09*Earnings per share are not listed on the stock quote.Stock yield ==3.1%=PE Ratio =$39.09$2.30= 17=Dividends on Preferred and Common StockThe stock records of Jason Corporation show the following:Preferred stock issued: 20,000 shares. In 2014, Jason paid no dividends.Preferred stock cumulative at $.80 per share. In 2015, Jason paid $512,000 in dividends. Common stock issued: 400,000 shares. 2014Dividends paid 0Preferred stockholders Paid: 0 Owe: 20,000 x $.80 = $16,000Common Stockholders 0 2015Dividends paid $512,000Paid for 2014 16,000Paid for 2015 16,000 32,000Total dividend 512,000Paid preferred for ‘14 & ’15 -32,000Common Stockholders $480,000 $480,000 = $1.20 per share400,000 sharesReturn on InvestmentSuppose you bought 200 shares of General Mills stock at $39.09 and sold them 1 year later at $41.10. With a 1% commission rate buying and selling the stock and a current $1.21 dividend per share in effect, what was your return on investment?Bought200 shares at $39.09 = $7,818.00Commission at 1% = 78.18Total cost $7,896.18Sold200 shares at $41.10 = $8,220Commission at 1% = - 82.20Total cost $8,137.80Total receipt $8,137.80Total cost -7,896.18Net Gain $241.62Dividends + 242.00 (200 x $1.21)Total Gain $483.62$ 483.62$7,896.186.12% rate of returnBond Quotations in NewspapersYearly interest = Face value of bond x Stated yearly interest rate $56.50 = $1,000 x .0565Bond Quotations in Newspapers= 5.7%= 5.69%Yearly interest: Cost of bond: (.0565 x $1,000)(.9959 x $1,000)=$56.50 $995.90=Calculating Bond YieldsBond yield =Jim Smith bought 5 bonds of Coke at the closing price of 99.59. What is Jim’s interest? (Remember that in dollars 99.59 is $995.90.) $282.50$ 4979.50 Total annual interest of bondTotal current cost of bond at closing5 bonds x $56.50 interest per bond per year 5 x $995.90= 5.7% =Example: Why Investors Choose Mutual FundsDiversificationLiquidityLow fund expensesAccess to foreign marketsProfessional managementNet Asset ValueNAV = Current market value of fund’s investment -- Current liabilities Number of shares outstandingNet asset value (NAV) – the dollar value of one mutual fund shareMutual fund – a portfolio of stocks and/or bondsCommissions: Mutual FundsClassification Commission charge Offer price to buyNo-load (NL) fund No sales charge NAV (Buy directly from investment company)Low-load (LL) fund 3% or less NAV + commission % (Buy directly from investment company or from a broker)Load fund 8 ½% or less NAV + commission % (Buy from a broker) Mutual Fund Quotations in Newspapers FUND Net YTD 3-Yr.NAME NAV Chg % Ret % Ret.Grln P 13.82 -0.06 8.9 71.6NAV plus the sales commissionNet Chg >Changes in NAV versus the previous dayYTD % Ret > Fund return this year