Shares2009

The text is a resume of a book that makes stocks and other investment words more understandable for families. it defines the following terms:
Shares: A share is a right to receive dividends a company will give once or twice a year to its shareholders, and allows the owner to vote in the annual general meeting in order to the ammount of stocks he posseses, the more he owns the more his vote counts.
Assets: The assets of a company, are the company`s goods that it posseses once deducted its debts and borrowed money. Assets are i.e. properties, money, buildings, etc.
Nominal share value: it stands for the original price of the stock when it was first emmited. In the future, a stock could increase its value, reflecting a potential growth in the company´s earnings.
Companies sometimes also issue non-voting shares, which permit the investor to enjoy the same benefits, but not be able to vote. They were originally created for the founding families to keep in control of the company decitions.
Dividend and its cover: the dividend is what a company’s gains that is spread to its shareholders; it is divided by all stocks equally. The dividend is not all the company´s profit, because sometimes it will be used as a reserve for further years with no gains. A cover is the fraction of the profit that a company gives away, for example; if a company profits 1000, and gives dividends of 250; the dividend is covered 4 times.
P/E ratio: when the company profits are divided by the number of shares, we get the earnings per share, that is the profit each share obtains, from there we get to the P/E, which is the years it will take to cover the price of the share with the profits, after that point, any divident will pure profit.
The Yield: the yield is like the interest rate of a stock, it is the performance of a share. It usually remains lower than the local interest rate. That is because stocks are a riskier investment than perhaps some other safer investments that rely on the interest rate, but in contrast, stocks will offer higher profits.

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