Financial Markets - Financial Instruments - Stocks

5 important questions on Financial Markets - Financial Instruments - Stocks

What is a stock index?


Is computed as an average of a group of stock prices like:
  • AEX
  • LSE
  • Dow Jones Industrial average (DJIA)
  • Standard & Poor's 500
  • New York Stock Exchanges Indexes (NYSE)
  • Nasdaq Stock Index ( DAX, Hang Seng, Nikkei)

Meaning abbreviation: D/P


The dividend to price ratio (r), is called dividend yield.
r= D/P ( D is dividends paid per share/ prevailing stock Price

What is the P/E ratio?

Price earnings ratio: earnings divided by the number of existingshares of stocks ( = K/w in Dutch) [ gives an idea whether the stock is over or undervalued]
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What is the Pay-out ratio:

Total dividend payment divided by earnings after tax - staff bonus { = tantiemes, a part of the profits paid to the managers and directors, and sometimes to the staff of a business}

What does Vol or sales mean?

Volume: The volume is normally quoted in hundreds of shares

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