QFA Investments (Poorly Performing Areas) Exam Questions And Answers
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Course
QFA
Institution
QFA
Key numerical Measures in Assessing Share Value - ANS Gross Dividend Yield
Dividend Cover
Earnings Per Share
The P/E Ratio
Net Asset Value
Market Capitalisation
EBITDA
Dividends Company - ANS Dividends from Irish resident companies are assessed to income tax under Schedule ...
QFA Investments (Poorly Performing
Areas) Exam Questions And Answers
Key numerical Measures in Assessing Share Value - ANS Gross Dividend Yield
Dividend Cover
Earnings Per Share
The P/E Ratio
Net Asset Value
Market Capitalisation
EBITDA
Dividends Company - ANS Dividends from Irish resident companies are assessed to
income tax under Schedule F, at the investor's marginal tax rate.
Dividends paid by Irish resident companies are normally subject to dividend withholding tax
(DWT) at standard rate of tax, that is, currently 25%.
The investor is taxed on the sum of the (net dividend received + DWT deducted), with the DWT
then being allowed as a credit or deduction from the investor's total income tax liability
Dividend - Investor - ANS Where an investor opts to receive dividends in the form of shares
from an Irish resident company (scrip dividend), instead of cash, DWT is applied to the gross
cash amount and the net amount is then used to buy shares for the investor at the
predetermined price.
However, the investor is still liable to income tax at their marginal rate on the gross dividend,
with allowance for the DWT deducted at source, as if he or she had received the cash dividend
payment.
A similar system operates in respect of dividends received on many foreign shares. Currently,
however, there is no with-holding tax on UK dividends.
Revenue plan to move to an individualised DWT rate at some stage, which will be based on
each investor's own tax rate. This will see higher rate taxpayers having a DWT of currently 40%
with standard rate taxpayers having a 20% rate applied. No date has yet been confirmed for the
change.
Gross Dividend Yield - ANS Gross annual dividend, divided by current share price
Dividend Cover - ANS A ratio that measures the potential for future capital growth of the
firm. It measures how easily the dividend can be paid (or 'covered') out of the current profits of
the firm. It is calculated by dividing the profit accruing to shareholders by the level of dividends.
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