Stocks questions, answered

Orders, splits, dividends, valuation and short selling explained for everyday investors.

• How Does the Ex-Dividend Date Work?

  To receive a dividend you must buy the stock before the ex-dividend date. Since US settlement moved to T+1 in May 2024, the ex-dividend date is generally the same day as the record date. On the ex-date the share price usually drops by roughly the dividend amount, so buying just for the dividend is not free money.

• Market Order vs Limit Order: What Is the Difference?

  A market order fills right away at the best available price, so you get certainty of execution but not of price. A limit order fills only at your price or better, so you control the price but it may never fill. Use limit orders in thin, volatile or after-hours markets.

• What Is a Good P/E Ratio for a Stock?

  There is no universally good P/E ratio. The P/E is share price divided by earnings per share, so it tells you how much investors pay for $1 of profit. Compare it with the company's own history, its sector and its growth rate; a low P/E can signal value or trouble, and a high P/E can signal growth or hype.

• What Happens When a Stock Splits?

  In a stock split you get more shares at a proportionally lower price, so the total value of your holding does not change. In a 2-for-1 split, 10 shares at $200 become 20 shares at $100. A reverse split does the opposite and is often a sign of a struggling company.

• What Is a Short Squeeze and How Does It Happen?

  A short squeeze happens when a heavily shorted asset rises and short sellers are forced to buy it back to limit losses or meet margin calls. That forced buying pushes the price higher still, which forces more buying. Squeezes can be violent and short-lived, and late buyers often lose money.