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INVESTING IN STOCKS & SHARES

'An easy-to-understand guide to the way the stock market works, and how the investor should go about setting up a suitable investment strategy.'

In that page the author tries to define the most basic terms in the world of finance to people with an intermediate knowledge about investing in stocks & shares

Shares are part of a company, shows the value of the assets of the company and its owner a number of rights like voting.
Anything owned by a business (cash investments, buildings, machines and so on) that can be used to produce goods or liabilities are assets.

Company profits are usually split among the owners, shareholders but normally, the company keeps them for enterprise development.
The P/E (price to earnings) ratio measures how many years of earnings per share would be needed to pay for the share however it is hoped that the earnings and dividends will rise each year, thereby reducing the payback time of each share.

Another powerful tool for measuring business: the yield. A bank account that pays an interest rate of 4% per year has a 4% yield. In general the percentage per year that can be earned is dependent on the length of time that the money is invested.

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