Maths project :- Shares and dividend Presented by:- Jagraj singh Presentation guid:-Mrs jaspreet mam Class:-X Turquoise Roll no.16A Project on shares and dividend Shares : 1n financial markets, a stock is a unit of account for various investments. It often means the ‘stock of a corporation, but it is also used for collective investments such as mutual funds, limited liability companies, and real estate investment trusts. Companies issue shares that are offered for sale to increase share capital. The owner of shares of the corporation is a shareholder (or shareholder) of the corporation. ‘An action is an indivisible unit of capital, expressing the ownership relationship between the company and the shareholder. The denominated value of a share is its nominal value and the total of the nominal value of the shares issued represents the capital of a company, which may not reflect the market value of such shares. The income received from ownershio of shares is a dividend. The process of buying and selling stocks often involves going through a broker as a middle man. Stocks are valued according to different principles in different markets, but a basic premise is that a stock is worth the price at which a transaction would likely occur. Stocks were to be sold. The liquidity of the markets is an important consideration as to whether an action can be sold at any given time. A real sale transaction of shares between the buyer and the seller is generally considered to provide the best prima facie indicator of the market as to the “true value" of the shares at that particular time. Value of shares The original value of a share printed in the certificate of the share is called itsface value or nominal value (in short, NV). The NV of a share is also known as register value, printed value and par value. The price at which the share is sold or purchased in the capital market through stock exchanges is called itsmarket value (in short, MV). Ashare is said to be: ‘At premium or Above par, if its market value is more than its face value. At par, if its market value equals its face value. At discount or Below par, if its market value is less than its face value. ‘The share of a company that is doing well or expected to do well is sold in the market at a price higher than its NV. In such a situation, we say the share is at premium or above par. For example, if a share of NV of Rs 10 is selling at Rs 16 then the share is at a premium of Rs 6. The share of a company that is neither doing well nor poorly is sold in the market at a price equal to its NV. For example, if a share of NV of Rs 1100 is selling at Rs 100 then the share is at par. The share of a company that is doing poorly or may do poorly in the future is sold in the market at a price lower than its NV. In such a case, we say the share is at a discount or below par. For example, if a share of NV of Rs 100 is selling at Rs 80 then the share is at a discount of Rs 20. Types of shares Ordinary Shares :These represent part ownership of the firm and may pay out dividends from time to time. They give the owner the right to attend and vote at the Annual General Meeting (AGM) of the firm, so you will have a say in how the company is run. However, if the company becomes bankrupt, the firm will pay off all other creditors before reimbursing ordinary sharehoHers with any remaining funds. Ordinary shares are the most common type of shares, Preference Shares :Some companies for a variety of reasons have issued preference shares. These have special rights attached to them that vary from company to company. In general, preference shares give holders preference in either dividend allocations or voting rights or both. They will certainly pay out before ordinary shares in the event of a company being broken up. Bonds :Sometimes a firm will issue bonds (also called debentures) in the company. Bonds are different from shares in that they represent a part of the company's debt, not a part of the ownership of the company. They confer no voting rights at all, but they do get paid out before shareholders in case of bankruptcy.Dividends ; A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or a surplus, the corporation may revert the profit to the business (called retained earnings) and pay a proportion of the dividend benefit to shareholders. The distribution to shareholders may be cash (usually a deposit into a bank account) or, if the corporation has a dividend reinvestment plan, the amount can be paid by issuing new shares or repurchasing shares. A dividend is allocated as a fixed amount per share, with shareholders receiving a dividend proportional to their shareholding. For a corporation, paying dividends is not an expense; Rather, it is the division of profits after taxes among shareholders. Retained earnings (profits that have not been distributed as dividends) are shown in the equity section of the company balance sheet, as well as its issued share capital. Public companies often pay dividends on a fixed schedule, but they can declare a dividend at any time, sometimes called a special dividend to distinguish it from fixed-time dividends. Cooperatives, on the other hand, allocate dividends according to the activity of the partners, so that their dividends are often considered as an expense before taxes. In the world's financial history, the Dutch East India Company (VOC) was the first (public) registered company to never pay regular dividends (dividends). The VOC paid annual dividends amounting to about 18 percent of the value of the shares during almost 200 years of existence (1602- 1800).Dividend, Rate of Dividend The part of the annual profit of a company distributed among its shareholders is called dividend. The dividend is always reckoned on the face value of a share irrespective of its MV. The rate of dividend is expressed as a percentage of the NV of a share per annum. Meaning of the statement “r% Rs 100 at Rs M” The statement r% Rs 100 shares at Rs M means the following: The NV of a share is Rs 100. The MV of a share is Rs M. The dividend on a share is r% of NV, ie., Rs r per annum. An investment of Rs M gives an annual income of Rs r. Rate of return per annum = Annual income from an investment of Rs 100 Look at the statement given below: 9% Rs 100 shares at Rs 120 means Face value (NV) of 1 share = Rs 100. Market value (MV) of 1 share = Rs 120. The dividend on a share is 9% of its face value = 9% of Rs 100 = Rs 9 An investment of Rs 120 gives an annual income of Rs 9. Fete of return per annuans=, nil Incorne roman frsetment it Rs 700 Income 5 5 < 100)% 1)% x 100) Tap * 10" ° Tnvestment We advise our clients to take a final and an interim dividend like most limited companies. This will be typically 2 dividends per year ( 4 dividends at most ). However, if you are a small business rather than a contractor then itis possible to take dividends more regularly. The directors can only deciare a dividend if there are sufficient profits in the business, A director is in breach of his/her statutory requirement to the business if they authorise a dividend where there is insufficient profits Available Profit Dividends can be paid from retained profits and or from profits in the current financial year. Retained profits are the accumulation of previous years profits brought forward. The payment of a dividend to a director is recognised when the payment is “made available”. For example, ia dividend Is recorded in the company accounts in March and the funds transferred to the directors current account then the “made available” date will be March even if the funds are transferred in April.Different types of Dividend The profits of a company when made available for the distribution among its shareholders are called dividend. The dividend may be as a fixed annual percentage of paid up capital as in the case of preference shares or it may vary according to the prosperity of the company as in the case of ordinary shares. The decision for distributing or paying a dividend is taken in the meeting of Board of Directors and in confirmed generally by the annual general meeting of the shareholders. The dividend can be deciared only out of divisible profits, remained after setting of all the expenses, transferring the reasonable amount of profit to reserve fund and providing for depreciation and taxation for the yeer. It means if in any year, there is not profits, no dividend shall be distributed that year. The shareholders cannot insist upon the company to declared the dividend. It is solely the discretion of the directors. Aunt hinted that the dividend was an income of the owners of the corporation which they received in the capacity of the owner. Distribution of dividend involves reduction of current assets (cash) but not always. Stock dividend or bonus shares is an exception to it. Dividend may be of different types. It can be classified according to the mode of its distribution as follows [if !supportLists]-->(1) face value of the share, the share is called at premium or above par. If market value of a share < face value of the share, the share is called at discount ot below par. I. Total face value = number of shares X face value of I share. 2. Annual dividend or dividend = dividend % % total face value 3. No, of shares = —total investment face value of a share (When shares are purchased from the company.) 4. No. of shares = —total i irket value of a share (When shares are purchased from the market.) 5. Rate of income on investment or Rate of return % or % yield on investment = -tlividend_ 199 investment 6. Price of each share Dividend % return on investment x No. of sharesExt. Sot. Solved Examples Aperson buys 120 shares at nominal value of € 40 each, which he sells out at €45 each. Find his profit and profit per cent. Gain in 1 share = & (45-40) = 85 Gain in 120 shares = € 120. § = £600 $00 5100 ws: Gain % = {360055 x 100 Raman buys € 100 shares of a company at € 90 and sells them when the price becomes © 30 below ‘par. Find his loss if he invested & 4,050, No. of shares bought = %-4050 + 90 = 45 S.P.of I share = &(100~30) = &70 SRot 45 shares = 70% a5 = 23,150 CR of 45 shares = &4,050 Loss = & (4,050 3,150) = 900 Which is a better investment: 12% © 100 shares at 120 or 8% at € 90? For Ist case Income on € 120 = 12% of € 100 = €12 anda Income on®1 = @ 12 = 80.10 For ind case Income on ® 90 = 8% of 100= 88 Income on® 1 = 8 = 80.09 First investment is beter ‘Aman invested 245,000 in 15% 100 shares quoted at Z 125. When the market value ofthese shares rose to 140, he sold some shares, just enough to raise & 8,400. Calculate: )_ the number of shares he still holds. the dividend due to him on these remaining shares. Face value ofeach share = @ 100 Maret value ofeach share = & 125 Investment = €.45.000 [Number of shares purchased = 45000 360 Now increased market value = € 140 Amount raised by selling few shares = &8.400 fof shares sold = $400, = Novof shares sold = 400 = 6 0 No. of shares he sill holds = 360 ~ 60 = 300 (Amount on which dividend will be received = 300 x 100 = & 30,000 Dividend de to him = 15% of 830,000 = & 4500 A-company with 10,000 shares of € 100 each declares an annual dividend of 5%. What is the total amount of dividend paid by the company? What would be the annual income of a man, who has 72 shares in the company? (iif) If he received onty 4% on his investment, find the price he paid for each share. o “Total face value = © 100 > 10,000 = & 10:00,000 Toval amount of dividend = 5% of 10,00,000 = € 50,000 (iam incomeon 72 shares» $5 of (72 10) = thy x 72x 100 = e360Ex7. Dividend @retar on ivestment x No.of hares 300g 401x100 ian me 106 = Price paid foreach share = © 125 Mr, Sharma buys 60 shares of nominal value of 100 and he decides to sell them when they are at a premium of 60%. He invests the proceeds in shares of nominal value of % 50, quoted at 4% discount, paying 18% dividend annually. Calculate: (@) the sale proceeds, (id) the number of shares he buys and (ii) the annual dividend from these shares. (Nominal value of 60 shares = @ 100 x 60 = % 6,000 The sale proceeds = % 6000 + 60% of € 6,000 F000 + ¢ 0x50 (#) Discount on each share = 4% of 850 =%2 +: market value of each share = 748 $0, numberof shares bought = 248 = 200 (i) Total face value = $0 200 = % 10,000 Ava dividend = 19% of mp0 = 8, 5 100m € 100 A man invests % 9600 on % 100 shares at © 80, If the company pays him 18% dividend, find: (i) the number of shares he buys. (ii) his total dividend. (iid) his percentage return on the shares, peo} (Number ofshars bought = 940 = 129 (i) Dividend = 18% of total face value (#i) Price paid for each share = 6000 + & 3600 = & 9600 Dividend x 100 = Investment ‘Mr. Parekh invested © 52,000 on % 100 shares at a discount of & 20 paying 8% dividend. At the end of one year, he sells the shares at a premium of % 20, Find the annual dividend. (ii) the profit earned including his dividend. fou} Face value of one share = 100 Market value of one share = % 100-2 20 = & 80 Investment = %52,000 52.000 80 ‘650 100 = %65,000 % OFF 65000 ark « = thy «6.000 = 85.200 100 + %20= 7 120 25% (iii) Percentage retum = No. of shares purchased 650 “Total face value 0 Annual dividend @ [New market value of one share = Amount received on selling 650 shares = & 120 X 650 = & 78,000Conclusion:- While individuals for whom the stock market is literally their life, such as with brokers and investors (both major and minor, the latter often tracking and trading in so-called penny stocks), access to a ticker such as is provided on the bottom of the television screen on business-oriented networks like CNBC and Fox Business News is essential. Newspapers, prior to the advent of business-oriented television networks, were the primary means for the average citizen of tracking stocks over a period of time. The business sections of many newspapers included comprehensive listings of stocks for the New York Stock Exchange as well as for other major exchanges. With the introduction of cable television, however, and with the Internet, data on stocks could be reliably attained far more quickly than was the case with reliance on newspapers. Newspapers, it is important to remember, reflect information as available on a very specific period of time. Once the newspaper "goes to press," the information in the paper cannot be modified to reflect changes in ongoing events, including with respect to global stock markets (e.g., the Hang Seng in Hong Kong, the Nikkei in Tokyo, and the Shanghai Composite in Chinana-“Newspapers simply cannot keep up with the rapid rate of change that routinely takes place in stock markets, although most newspapers now have their own Internet sites that do provide up-to-date information. All of that said, newspapers are still useful for students learning how to track individual stocks. Those papers that still include stock market data can be used to consult the peaks and valleys common to many stocks, with the data charted on a graph so as to provide for an informative "picture" of how that stock is doing over a period of time. The student simply needs to pick the stocks in which he or she is interested, locate those stocks in the relevant market (e.g., New York Stock Exchange, Nasdaq), note the current price at which the stocks are selling, and the time and date of that data. As suggested, a graph can easily be drawn-up to reflect those stocks' positions on a daily basis, which provides insights into the stability of the stocks.Bibliograph:- *Google *Newspaper *Social media *ParentsThanks!