“Fries with that dividend increase?”
Oct 6th, 2010 by crystallee
Two classes ago, we had the chance to preview what finance is and may be like in class. I learnt that finance is about “allocating resources more efficiently in the economy” and is a “subfield of economy, applying basic economic principles to study the supply and demand of the capital”.
A couple ideas that came to mind about finance within our class was stocks, investment, big salary, and also currency, just to name a few. Our guest lecturer, Professor Murray Carlson had said that other aspects of finance also includes portfolio management, investment banking, and also security fraud. Prior to this class, personally, when I think of finance, I think of the New York Stock Exchange and the Toronto Stock Exchange. After this class, I had the chance to learn about other aspects of finance, and that it wasn’t just all about stocks.
Food for thought: http://www.theglobeandmail.com/globe-investor/investor-education/investor-clinic/clinic-video/fries-with-that-dividend-increase/article1745934/
I think McDonald’s has experienced increased dividends because of the potential that investors see in McDonald’s, as well as the amount of money people are still willing to spend on McDonald’s foods. Even though the awareness of being healthy is being raised across North America, fast food restaurants like McDonald’s is still popular among food choices. It’s no wonder the dividends for McDonald’s has increased over tenfolds in the last the years!
A few keypoints I learned from the class was:
– When stock prices are underpriced, it may mean that the company is not doing very well and therefore the stock prices have dropped. Financial analysts will then tell the public to buy the stock so that the price will eventually increase again. Or it may be that the company isn’t well know and financial analysts see potential growth in the company.
– You cannot do finance without the reported numbers from accounting. Accounting is the language of business, and tells you the financial state of the firm. Finance includes both qualitative and quantitative information, usually provided to outsiders and investors to attract them to invest in or to buy the stocks of the firm. (Recall from our first class how we learned that marketing, accounting, and finance all have something to do with each other. In this case, you can’t do finance without the reported numbers from accounting.)
– Fundamentally, as an investor, you are giving up money today so that you can earn money for the future. The most important characteristic of an investment as an investor, is to understand its dividends.
I hope you guys enjoyed the Finance class as much as I did!