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Term Main definition
Discount rate

An imaginary interest rate, most often equal to the long-term historical return of the stock market, which is used to calculate how much a dollar amount in the future is worth in today's money. This is the minimum return you would have to earn to justify stock picking over investing in an index fund.

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Dividend payout ratio

The percentage of net income which is paid out to shareholders in the form of dividends, instead of being reinvested into the company.

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Dividend yield


The return you earn from dividends paid out by a company. This percentage is calculated as follows:
Dividend yield = Annual dividend per share / Current share price
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