Chapter 21 - Stocks, Bonds, and Mutual Funds

Chapter 21 - Stocks, Bonds, and Mutual Funds

1. Stocks

   • Common Stock
     • Have voting rights
   • Preferred Stock
     • Do not recieve voting rights, but they receive preference over common stockholders in dividends
   • Formulas
     • Stock Yield Formula = Annual dividend per share/Today's last price per share
     • Earnings per share = Last price/Price-earnings ratio
     • PE ratio = Last price per share of stock/Annual earnings per share

2. Bonds

   • Bond selling for more than the face value (FV)
   • Formulas
     • Yearly Interest = Face Value of Bond x Stated Yearly Interest Rate
     • Bond Yield = Total annual interest of bond/Total current cost of bond at closing

3. Mutual Funds

   • Investors buy shares in the fund’s portfolio (group of stocks and/or bonds)
   • Formual
     • NAV = Current market values of funds