Benefits + Risks of Owning Shares Flashcards
1
Q
Reasons for investing in equities
A
- Dividend Income
- Capital Growth
- Shareholder Perks
- Right to purchase new shares e.g. Rights Issue
- Voting rights at company meetings
2
Q
Dividend Yield
A
- Rate of return that Shareholders receive based on current share price and the dividend received
3
Q
Dividend Yield Formula
A
Dividend per share / Market Price per share x 100
4
Q
4 types of Risks with Owning Shares
A
- Price Risk
- Market Risk
- Liquidity Risk
- Issuer Risk
5
Q
Price Risk
A
Capital at Risk Investments
Share Price up or down
6
Q
Market Risk
A
Unexpected that affects entire equity markets
7
Q
Liquidity Risk
A
How easily can you buy/sell shares
8
Q
Issuer Risk
A
Specific / Unique Risk exposed to single issuer
Issuer Risk is in relation to company going liquidation or issuer not paying dividend
9
Q
Market - wide Falls
A
Market - wide falls in equity prices occur on fairly frequent basis
