Question

1. Explain how an announced increase in a firm's dividend payout might be perceived as either a good or a bad information signal.

2. Review how Zoom Video Communications stock has performed in relation to the overall market. Describe the Company Stock that you selected. Explain why the company has performed better or worse than the market over the last 10 days.

Answer 1

Answer: Dividend- It is a part of company's profit that is distributed to the shareholders. Dividend is paid on the face value. Companies that earn higher profits, pay higher dividends.

Forms of dividend- Dividend can be paid in following forms:

Cash- When company distributes dividend in the form of cash.

Stocks- When company does not have enough cash and pays dividend in the form of issuing the shares.

Announcement of dividend- When dividend is announced, share price of company increases because investors buy the shares of the company to receive dividend. So it is a good signal for a company as well as shareholders.

Payment of dividend- After paying cash dividend, cash in the company decreases because it has paid dividend in cash hence share price of company comes down just after the payment of dividend.

Answer(2): Zoom Video Communications- It is an American communication technology company. Its headquarter is in California.

Stock performance- Its stock is listed on NASDAQ. Its stock has not performed well with respect to overall market. On 23rd April, its stock was traded at 169 but then it kept on decreasing and now it is at $138.56. Company's stock has fallen down because on many competitors. Its competitors are: Cisco, Verizon communication, Google etc. Customers are using services of competitors rather than Zoom that is why it fell down.