Shares 6666

Dr.John White is the author of the extract taken from “Investing in stocks and shares” it is based on basic concepts related to stocks.
Firstly, the writer explains some basic concepts: shares, which are also called equities or stocks, give the owner the right to have a share in the company’s dividend and a vote in the annual general meeting (AGM) that varies depending on the size of the investor’s holding. There are some companies where investors do not have the right to vote : non-voting shares, they have practically the same rights as other shares they can´t vote in the company´s strategy. This was to avoid founders to control the company..Non-voting shares have gone out of fashion.

Shares have a nominal value: the asset value of the company, when shares are sold in the stock market their value changes. It is known as the issued capital to all the stocks the company posses.
Dividends are part of the proportion of profit given to the shareholders, The remainder is kept for internal company´s growth.

The P/E price to earnings ratio is a figure that represents the number of years of earnings per share needed to pay for the current share, It works out to be the division of the earnings which are the companys profits by the number of shares. As not all profits are paid as dividends, The key is based on holding the share, companies hope dividends and earnings rise each year in order to reduce the repayment time of the share price, however the stock can anytime be sold at the current market price.

Finally Dr.White explains the concept of the yield, it is another measure of a company´s achievements,commonly expressed as a net percentage of the current share price it varies within different countries ,the yields in each country are lower than the interest in local bonds, this happens beacause shares are more risky but have a higher return than bonds

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