Journal, 1997 Dow Jones & Company, Inc. All Rights Reserved Worldwide.     Limited liability means that the most shareholders can lose in the event of failure of the corporation is their original investment. Unlike owners of unincorporated businesses, whose creditors can lay claim to the personal assets of the owner (house, car, furniture), corporate shareholders may at worst have worthless stock. They are not personally liable for the firms obligations.   CONCEPT C H E C K ☞ QUESTION 4 a. If you buy 100 shares of IBM stock, to what are you entitled? b. What is the most money you can make on this investment over the next year? c. If you pay $50 per share, what is the most money you could lose over the year?     Stock Market Listings   Figure 2.10 is a partial listing from The Wall Street Journal of stocks traded on the New York Stock Exchange. The NYSE is one of several markets in which investors may buy or sell shares of stock. We will examine these markets in detail in Chapter 3. To interpret the information provided for each traded stock, consider the listing for Home Depot. The first two columns provide the highest and lowest price at which the stock has traded in the last 52 weeks, $70 and $39.38, respectively. The .16 figure means that the last quarters dividend was $.04 per share, which is consistent with annual dividend payments of $.04 4 $.16. This value corresponds to a dividend yield of .3%, meaning that the divi- dend paid per dollar of each share is $.003. That is, Home Depot stock is selling at 50.63 (the last recorded or "close" price in the next-to-last column), so that the dividend yield is .16/50.63 .0032 .32%, or .3% rounded to one decimal place. The stock listings show that dividend yields vary widely among firms. It is important to recognize that high- dividend-yield stocks are not necessarily better investments than low-yield stocks. Total re- turn to an investor comes from dividends and capital gains, or appreciation in the value of the stock. Low-dividend-yield firms presumably offer greater prospects for capital gains, or investors would not be willing to hold the low-yield firms in their portfolios. The P/E ratio, or price-earnings ratio, is the ratio of the current stock price to last years earnings per share. The P/E ratio tells us how much stock purchasers must pay per dollar of I. Introduction 2. Markets and Instruments The McGraw−Hill Companies, 2001