In the text “What Are Shares?”, the author tries to introduce the concept of company shares. He supplies a key to invest in shares and stocks by analyzing the most important concepts. This text is aimed at an inexpert audience.
The important part of a share is the dividend, which is the amount of money that an investor earns by holding shares. Dividends are paid once or twice a year.
Also, a shareholder is proportionally entitled to a company’s assets. Assets are all the company’s properties, from cash-in-hand, to payments to creditors. Finally, shares give the shareholder a right to co-decision through voting. There also exist shares without a vote, but for obvious reasons those are generally unpopular with investors.
Shares have a nominal price which originally represents the asset value. However, this price can change depending on the company’s potential to make profit. Shares are also known by the terms equity, or stock.
Dividends are the part of the profits paid to the shareholders. The other part becomes part of the internal growth of the company. The coverage rate of the dividend is calculated by looking at how many times the company could have paid this dividend.
We can also calculate “the earnings per shares” dividing the total earnings by the number of shares in existance, we also have the price to earning which gives us the number of years needed by earnings per share to pay for the share at current price.
Finally we have the yield that gives the company’s performance, they are usually lower and safer than profits given by other investments but it reflects the potential growth of its dividends.

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