This extract from Dr. John White "Investing in Stocks & and Shares" Lets us into the basics of stock investing and how their market works.

What is stock?
Stock gives the owner the right to enjoy a share of the dividend declared by the company, and a vote in the Annual General Meeting, and a stake in the company´s assets, but what are assets?
Assets of the company are the cash-in-hand, plus properties, plus inventories, less liabilities.

What is the Nominal Value?
The share´s nominal value represents how much the assets are worth, and their ability to make money, the addition of all nominal values of all the shares is the issued shared capital of the company. We can also find another kind of shares, which doesn't allow the owner of it vote, but they are becoming increasingly unpopular.

What are dividends, PE ratio and Yield?
Usually a company will use part of their profits to fund internal growth, and the rest to pay dividends to the stock owners. These are paid proportionally to the amount of stock they own.

The Price/Earnings ratio measures how many years of earnings per share, at the current share price, would be needed to pay for the share. Since not all earnings are paid as dividends we can expect the the repayment of the share will take longer, but we also hope for better dividends each year, so time until dividends are pure profit can also decrease. Anyhow, we can sell our stocks anytime we want for their "market price".

Yield is an important measure of the company's performance. It is typically expressed as a percentage of the current share price, and they don't have to be the same in every country.

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