Financial management
Instructions
1.What does it mean to be a stockholder? What are stockholders are entitled to?2. Discuss the purpose of stock markets and provide an examples of markets that exist today3. Identify and discuss the risks associated with owning stock and the purpose of investment portfolios
Answer
Financial ManagementQ1.Stockholders provide equity to an entity by purchasing shares of its stock. The stockholders of an entity are entitled to the benefits that arise from successful business operations, considering that they essentially own the organization (Johnson & Melicher, 2018). The benefits are received as monetary profits or improved valuation of their stock. Note that profits are distributed to the shareholders at the end of the financial year as dividends. It is also important to note that when an entity makes losses, the price of its shares declines, making the stockholders lose money as the value of their portfolios reduces (Johnson & Melicher, 2018). Although stockholders are eligible for earnings that remain after the assets of an organization are liquidated, prefe...
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