When two or more averages or indices fail to show confirming trends. The process of mixing a variety of different investments, types of industries, categories of risk or companies in order to reduce the risk in a portfolio. A model for valuing the common stock of a company, based on the present value of the expected cash flows. The fixed or floating rate paid on preferred stock based on par value. An investment arrangement in which corporate dividends, instead of being received as cash by the shareholder, are automatically used to purchase more shares of that firm's stock without paying commissions.
DRIPs provide a low-cost way to steadily increase the portfolio value in a particular stock.
The annual dividends paid by a company divided by its current stock price. Over time, the average cost per share of the security will become smaller. This method attempts to lessen the risk of investing a large amount in a single investment at the wrong time. Used with mutual funds and dividend reinvestment plans. The interest rate that will make the present value of the cash flows from all the subperiods in the evaluation period plus the terminal market value of the portfolio equal to the initial market value of the portfolio.