All categories

2 years ago

If a company pays dividends on a stock, does that mean that the stock has appreciated in value? Why or why not?

Business

2 answers:

BabaBlast [244]2 years ago

5 0

No, it is not

Dividend only indicated that the company has just earned profit in the last financial period.

A stock would appreciate in value if many investors see it as a great opportunity to earn profits. There are other factors that influenced a stock for it to be appreciated in value, and dividend is just a small portion for it. For example, the company need to had a good cash flow, the company need to maintain a good name in public, the company need to had high asset to debt ratio, etc.

PolarNik [594]2 years ago

4 0

Dividend is the amount of share in the earnings paid by the company to its shareholders for their investment in the company. So dividend is paid out of the earnings made by the company and it has no relation with the increase or decrease in the value of the stock.

Hence, If a company pays dividends on a stock, it does not mean that the stock has appreciated in value.

You might be interested in

Prepare Garzon Company's journal entries to record the following transactions for the current year. January 1 Purchases 9.5% bon

Andre45 [30]

Answer:

Garzon Company

Journal Entries

January 1 Debit 9.5% Bonds Receivable PBS $45,600

Credit Cash $45,600

To record the purchase of bonds in PBS.

June 30 Debit Cash $2,166

Credit Bonds Interest Revenue $2,166

To record the receipt of first semiannual interest.

December 31 Debit Cash $47,766

Credit 9.5% Bonds Receivable $45,600

Credit Bonds Interest Revenue $2,166

To record the receipt of both principal and second semiannual interest.

January 1 Debit 9% Bonds Receivable PBS $52,000

Credit Cash $52,000

To record the purchase of bonds in PBS.

June 30 Debit Cash $2,340

Credit Bonds Interest Revenue $2,340

To record the receipt of first semiannual interest.

December 31 Debit Cash $54,340

Credit 9% Bonds Receivable $52,000

Credit Bonds Interest Revenue $2,340

To record the receipt of both principal and second semiannual interest.

Explanation:

a) Data and Analysis:

January 1 9.5% Bonds Receivable PBS $45,600 Cash $45,600

June 30 Cash $2,166 Bonds Interest Revenue $2,166

December 31 Cash $47,766 9.5% Bonds Receivable $45,600 Bonds Interest Revenue $2,166

January 1 9% Bonds Receivable PBS $52,000 Cash $52,000

June 30 Cash $2,340 Bonds Interest Revenue $2,340

December 31 Cash $54,340 9% Bonds Receivable $52,000 Bonds Interest Revenue $2,340

3 0

2 years ago

What action(s) can commanders take that will help them organize and interface with the myriad of relevant players and informatio

Shalnov [3]

<u>Answer:</u>

The actions commanders can take that will help them organize and interface with the myriad of relevant players and information flows are:

delineating staff interface responsibilities and designate LNOs
avoiding using Foreign Disclosure Officers (FDOs) as part of their staff
reducing reliance on e-mail for sharing information

<u>Explanation:</u>

With the many different compartmentalized procedures and techniques each player brings, commanders at each level can achieve situational awareness. Experience, expertise, and viewpoints can be consolidated across many players working together and dialoguing. The Commander is one of Squad's play most important roles, since the stance holds power over all other player in the game. Players must obey orders from their Squad Lead and Squad Leads must obey orders from the Commanders.

7 0

2 years ago

Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions ar

sleet_krkn [62]

Answer:

$2,115

Explanation:

Lexington Company's Year 2 net cash flow from financing activities = cash received from issuing stocks minus bank loan payments - distributed dividends

net cash flow from financing activities = $1,250 (from additional stock) - $1,825 (bank payments) - $1,540 (dividends paid) = $2,115

8 0

2 years ago

Prepare a net worth statement for Ben Lingo based on this information: He owns a car worth $2,000, but owes $1,500 on it at the

Murljashka [212]

Answer:

Ben Lingo's Net Worth Statement:

Assets:

Cash $82

Savings $150

Car $2,000

Inventory $1,200

Total Assets = $3,432

Liabilities:

Car loan $1,500

Credit Union loan $80

Total Liabilities = $1,580

Net Worth = Total Assets - Total Liabilities

= $3,432 - $1,580

= $1,852

5 0

2 years ago

The common stock of Detroit Engines has a beta of 1.34 and a standard deviation of 11.4 percent. The market rate of return is 11

stealth61 [152]

Answer:

The firm's cost of equity is C. 14.05 percent

Explanation:

Hi, we need to use the following formula in order to find the cost of equity of this firm.

$r(e)=rf+beta(rm-rf)$

Where:

r(e) = Cost of equity

rf = risk free rate

rm = Market rate of return

Everything should look like this.

$r(e)=0.04+1.34(0.115-0.04)=0.1405$

So, this firm´s cost of equity is 14.05%

Best of luck

6 0

2 years ago