Your Questions About Investopedia

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Paul asks…

What is the difference between expense and cost of goods sold?

Are expenses – costs that go into creating the products that a company sells, and cost of sales the ones that are not directly related to production?

But then investopedia, says that cost of sales it directly involved in only prodcution???
And a textbook says only in services not directly related to production…??

Justin answers:

Cost of good sold is an expense. It includes everything directly related to the product. Expenses are everything that involves money going out. Including overhead items like electricity and insurance.

Joseph asks…

How to find the Stock Market Return & profit per share from exercising the option?

There’s a test in my Finance class tomorrow and guess who discovered he had the wrong book!

Anyway, I went to investopedia and cruised through the book I DO have and couldn’t find how to calculate the Stock Market Return OR how to find the profit per share from exercising a stock option.

I assume the exercised option is just the current price minus the option price, but I have no clue about the SMR.

Thanks!

Justin answers:

Just go to www.finance.yahoo.com. They already did all the calculations for you.

Steven asks…

Is there a place online where you can buy individual stocks in real time?

I just signed up with sharebuilder and they buy in on Tuesday for you. I also have a simulated stock portfolio on investopedia to see the flucuations in share values.

So, what I want to do is see a stock at a daily low and go in a buy it immediately. Is that possible online? It seems like it should be. And yes, I’m new to this.

Justin answers:

You can do what you’re asking about with E*Trade.com.

James asks…

How do I benefit when a company does not pay dividends and they reinvest the money?

I’m really confused about what happens when u invest in a stock or mutual fund but the company doesnt pay the dividend and uses that money to reinvest it.

How does the stock or mutual fund holder benefit.
Is he or she making any money after the end of the year without selling the stock or mutual fund? Do they get any kind of payout?
I read and introduction to investing article on Investopedia and they got into “compounding”. I understand that concept but when does that apply to stocks and mutual funds?

Justin answers:

Using the money to grow the business gives you (the stock holder) greater opportunity for the share price to increase )over time).

A Mutual Fund that has this company in their portfolio will get the same benefit.

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