Has Amazon Taken from My Shares, Judging from the Stock Split?

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Friday letters are usually dedicated to taking questions from our community. Do you have a question for us? Please feel free to send an e-mail to [email protected] or a DM to any of our social media channels.

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Question?

I have Amazon shares. From the announcement regarding stock split on Twitter, does this mean Amazon has taken from my shares?

Answer?

No, your shares are intact. A stock split simply means that the company has increased the number of shares and decreased the value of each share.

It doesn’t really change anything for your shares, it only makes the company’s shares less pricey.?

For example, if prior to the split, you owned 1 unit of Amazon shares valued at $2,800, this means you would now own 20 Amazon shares with the same value of $2,800. Anyone who wants to buy 1 unit of Amazon shares after the split will now have to pay $140 per share (i.e. 2,800/20).

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Question

What is the stock market index??

Answer?

Stock market indexes are basic mathematical averages that tell you how the stock market is doing. They basically measure the stock market.?

The US stock market basically has three major indexes used to measure the market. They are: The Dow Jones, S&P 500 and the NASDAQ composite index.?

All of these indexes go about their measurements in different ways.?

The S&P 500 (Standard & Poor’s) which is the most widely used index is the average of the 500 largest US companies. It makes its calculation by using the market float of shares. This means that it gives companies with the greatest value of shares available to be traded a high spot in their calculation. The S&P 500 also calculates a broader market.

The NASDAQ composite index, however, calculates based on market value, which means that the companies with the greatest total market value have a high spot in their calculation. The NASDAQ composite index calculates only stocks in the NASDAQ market.?

The Dow Jones Industrial Average is an index of 30 of the largest blue-chip stocks in the market. It is a price-weighted index, unlike the S&P 500 that is market-cap weighted. The index is calculated by adding the stock prices of the 30 companies and then dividing by the divisor. The divisor being the number of companies.

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Question

Are we charged taxes on dividends gotten from the US stock market?

Answer?

Yes, there is a 30% WHT (Withholding Tax) on dividends, which is a mandatory tax taken by the US government for individuals buying stock outside of the US.

A dividend is a share of profits and retained earnings that a company pays out to its shareholders.

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