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Running Head: INVESTMENT ANALYSIS
1. 52-week range: indicates the two most extreme prices at which a stock has traded in the
past period lasting 52 weeks. These two prices are the highest and the lowest.
2. Current stock price: the price at which stocks are being traded at the moment.
3. Dividend yield: the expression of a dividend as a percentage of the current price of
4. Dividend per share: all dividends paid out by a company divided by the shares that are in
5. P/E ratio: price to earnings ratio is an indication of the current demand of a company’s
share by investors, where a high p/e ratio is a reflection of the increased demand for the
shares of this company due to future.
6. Earnings per share: an indicator of the profitability of a company since it is the portion of
the profit that a company allocates to every share.
7. Shares outstanding: is the collection of all shares that are presently being held by all the
shareholders of a company.
8. Market capitalization: the market value of the firm’s shares outstanding, and is the
product of stock price and the number of shares.
9. The cost of capital: the opportunity cost incurred by a business when it chooses to put its
money in an investment over another.
10. Growth rate: indicates the periodic change in the value of stocks, often indicated in
Efficient Market Hypothesis
There are numerous theories applied when dealing with issues pertaining to the market.
One of these theories is the Efficient Market Hypothesis. This investment theory states that it is
not possible for an investor to act in a manner as if to beat the market. The theory is based on the
notion that stock prices are influenced by the stock market efficiency so that they entail and
reflect all the relevant information at all times. Also, the theory holds that the price at which
stocks sell at stock exchanges will always be the fair value of these stocks. These measures are in
place to ensure that investors do not buy or sell stocks at prices that are undervalued, or inflated
respectively. With these measures in place, the Efficient Market Hypothesis then holds true for
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