ou are discussing buying stocks with a friend and mention that you ays that's a terrible idea because Amazon has never paid dividends to its shareholders so you would never receive any of Amazon's profits or make any money off the stock. What might you say to your friend to defend your desire to purchase a few shares of Amazon stock? You explain that the price of Amazon stock will always have to rise because dividends are not paid. the fundamental value of the stock is not determined by the dividends paid, but by the present value of future profits. aid if the compar
ou are discussing buying stocks with a friend and mention that you ays that's a terrible idea because Amazon has never paid dividends to its shareholders so you would never receive any of Amazon's profits or make any money off the stock. What might you say to your friend to defend your desire to purchase a few shares of Amazon stock? You explain that the price of Amazon stock will always have to rise because dividends are not paid. the fundamental value of the stock is not determined by the dividends paid, but by the present value of future profits. aid if the compar
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:The Financial Sector-End of Chapter Problem
You are discussing buying stocks with a friend and mention that you want to buy a few shares of Amazon stock. Your friend
says that's a terrible idea because Amazon has never paid dividends to its shareholders so you would never receive any of
Amazon's profits or make any money off the stock.
What might you say to your friend to defend your desire to purchase a few shares of Amazon stock?
You explain that
the price of Amazon stock will always have to rise because dividends are not paid.
the fundamental value of the stock is not determined by the dividends paid, but by the present value of future profits.
purchasing stock is better than purchasing bonds because stockholders are the first in line to get paid if the company
goes bust.
buying a few shares will give you a significant say in how Amazon will be run in the future.
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