How does stock price and dividends reflect the value of the firm?
Stock, equity or share refers the ownership of a person in an organization or corporation. Corporations often issue shares to the public in order to acquire more capital for future expansion or business growth. Public has the right to purchase the stocks or shares of a company in order to get ownership in that corporation based on certain rules and regulations. For example, if a corporation issues 100 shares in total, each share provides 1 ownership to the shareholder in the company. Share prices can increase or decrease based on the market conditions and the performances of the company. Corporations often keep certain percentage of its annual profits for future expansion of the company and pay certain percentage of the profits to its shareholders. The annual profit paid to the