In this article the use of shares is explained and the way they work.
A share is an equal part of the company’s capital stock, they’re proportionally distributed depending on the investor’s holding. The amount of shares also enables the investor to have a bigger or smaller vote at a company’s annual general meeting (AGM).
Shares do also give an amount of assets, these are all those things that the company owns like cash, properties etc. (it doesn’t include debts).
The Nominal Share Value is the market value of a share by the time it goes out for the first time, it represents an equal part of the company’s capital. They usually value 25p but this can change however. There are some shares nominated “A” shares that have most of the benefits of the rest of the shares but with one restriction: the holder of these “A” shares doesn’t have any vote in the company’s way of working (plans). These shares aren’t very popular because of their restrictions but they were made so the founding families could still be in control of the company.
The Dividend is part of profits that belong to the share-holder that is paid by the company, if this dividend has to be paid in four different times for the same value we say that the dividend has to be covered four times.
Earnings are the company’s profits, this is the money the company has obtained after taking away all the taxes etc. If we divide the earnings by the ,at that time, existing shares we obtain the earnings per share.
The P/E ratio (price to earnings) measures how many years of earning would be needed to pay for the price of the share. Of course it is hoped that shares and dividends rise every year.
The Yield is a measure to see how the company’s are working, it’s different in every country and it changes depending the risk taken on the investment.

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