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8.2.6 Reading Stock Quotations

Learn how to read and interpret stock quotations for listed and unlisted stocks traded on stock exchanges and over-the-counter (OTC) market.

Understanding Stock Quotations

Two types of stocks are traded during the day: those listed on the stock exchanges and unlisted stocks that trade on the over-the-counter (OTC) market. Understanding how to read stock quotations is essential for anyone interested in stock trading, whether they’re seasoned investors or just getting started.

A typical quotation for stocks traded in Canada on the stock exchanges is shown in this table:

BEC Inc. Stock Quotation - 52 Weeks

High Low Stock Div. High Low Close Change Volume
12.55 9.25 BEC 0.50 10.65 10.25 10.35 +0.50 6,000

This type of quotation, which may vary in format depending on the media source, provides detailed insights into the stock’s performance. Let’s break down and interpret the BEC Inc. Stock Quotation:

  • BEC common has traded as high as $12.55 per share and as low as $9.25 during the last 52 weeks.

  • BEC common has paid dividends totalling $0.50 per share during the last 52 weeks. (Sometimes, an indicated dividend rate may appear if the company pays regular dividends and has recently increased a dividend payment.)

  • During the day under review, BEC common shares traded as high as $10.65 and as low as $10.25.

  • The last trade of the day in this stock was made at $10.35.

  • The closing trade price was $0.50 higher than the previous trading day’s closing trade price. (Therefore, BEC shares closed at $9.85 on the previous trading day.)

  • A total of 6,000 BEC common shares traded that day.

Note that market prices used in stock quotations typically apply to standard trading units and exclude commission expense for trades in listed stocks.

Common Shares

Key Features and Benefits of Common Shares

From the Issuer’s Perspective:

  1. Capital Raising: Issuing common shares is a key method companies use to raise capital for expansion, research, and development.
  2. No Obligation for Fixed Payments: Unlike debt, common shares do not obligate the issuer to make fixed payments.
  3. Retention of Earnings: Companies can retain earnings, reinvest, and pay dividends based on profitability.

From the Investor’s Perspective:

  1. Dividends: Shareholders may receive dividends, providing a return on their investment.
  2. Ownership: Shareholders hold partial ownership of the issuing company and may benefit from capital appreciation.
  3. Voting Rights: Typically, common shareholders have voting rights which allow them to have a say in corporate decisions.

Frequently Asked Questions (FAQs)

Q: What is the distinction between listed stocks and OTC stocks?

A: Listed stocks are traded on formal stock exchanges, while OTC stocks are traded through a network of dealers. Listed stocks usually adhere to stricter regulatory requirements compared to OTC stocks.

Q: How is the change in stock price calculated?

A: The change in stock price is calculated by subtracting the previous day’s closing price from the current day’s closing price. For instance, if a stock closed at $9.85 the previous day and at $10.35 today, the change is $10.35 - $9.85 = $0.50.

Q: What factors can influence the high and low prices of a stock within a day?

A: Factors include market sentiment, news related to the company or its sector, broader economic indicators, and fluctuations in demand and supply for the stock.

Key Takeaways

  • Stock quotations provide a snapshot of a stock’s recent trading activity and performance metrics.
  • Listed stocks are traded on stock exchanges, while unlisted stocks are traded OTC.
  • Common shareholders benefit from potential dividends, capital appreciation, and voting rights.
  • Understanding how to read stock quotations is critical for making informed investment decisions.

Glossary

  • Listed Stocks: Stocks that are traded on official stock exchanges and adhere to regulatory standards.
  • Over-the-Counter (OTC): A decentralized market where securities not listed on major exchanges are traded directly between parties.
  • Dividends: Payments made by a corporation to its shareholders, usually derived from profits.
  • Market Sentiment: The overall attitude of investors towards a particular security or financial market.

📚✨ Quiz Time! ✨📚

🧐 Assess and Solidify Your Understanding

Welcome to the Knowledge Checkpoint! You’ll find 10 carefully curated quizzes designed to reinforce the key concepts covered. These questions will help you gauge your grasp of the material, identify areas that need further review, and ensure you’re on the right track towards mastering the content for the Canadian Securities certification exams. Take your time, think critically, and use these quizzes as a tool to enhance your learning journey. 📘✨

Good luck! 🍀💪

## During the last 52 weeks, what was the highest trading price of BEC common shares? - [ ] $10.65 - [x] $12.55 - [ ] $10.35 - [ ] $9.25 > **Explanation:** The highest trading price of BEC common shares in the last 52 weeks was $12.55 as indicated in the table. ## What dividend amount did BEC common shares pay per share during the last 52 weeks? - [ ] $0.65 - [ ] $12.55 - [ ] $10.25 - [x] $0.50 > **Explanation:** BEC common shares paid dividends totalling $0.50 per share during the last 52 weeks. ## On the day under review, what was the highest price at which BEC shares traded? - [x] $10.65 - [ ] $10.25 - [ ] $10.35 - [ ] $12.55 > **Explanation:** The highest price during the day under review was $10.65 as reported in the table. ## How much did BEC’s share price change from the previous trading day to the closing price of the day under review? - [ ] -$0.25 - [ ] $0.25 - [x] $0.50 - [ ] -$0.50 > **Explanation:** The closing price was $0.50 higher than the previous day's closing price. ## What was the closing price of BEC shares on the previous trading day? - [ ] $10.65 - [ ] $10.25 - [ ] $10.35 - [x] $9.85 > **Explanation:** Given the $0.50 increase, the closing price on the previous trading day was $9.85. ## How many BEC common shares traded on the day under review? - [ ] 12,000 - [ ] 10,000 - [ ] 5,000 - [x] 6,000 > **Explanation:** A total of 6,000 BEC common shares traded on the day under review. ## What was the lowest intraday trading price of BEC shares on the day under review? - [ ] $9.85 - [ ] $10.35 - [ ] $12.55 - [x] $10.25 > **Explanation:** The lowest intraday trading price of BEC shares was $10.25 on the day under review. ## What is the significance of the indicated dividend rate sometimes appearing in the stock quotation? - [ ] It shows historical dividend payments over the past 10 years. - [ ] It tracks temporary market movements. - [ ] It gives information about the stock splits. - [x] It indicates that the company pays regular dividends and has recently increased a dividend payment. > **Explanation:** The indicated dividend rate may appear if the company pays regular dividends and recently increased a dividend payment. ## Do market prices used in stock quotations for listed stocks include commission expense? - [ ] Yes - [x] No - [ ] Sometimes - [ ] Only for specific stocks > **Explanation:** Market prices used in stock quotations apply to standard trading units and exclude commission expense for trades in listed stocks. ## What do market prices in stock quotations apply to? - [ ] Fractional trading units - [ ] Private sales - [x] Standard trading units - [ ] Over-the-counter trades > **Explanation:** Market prices in stock quotations apply to standard trading units.

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Saturday, July 13, 2024