Shares0612

The extract taken from “Investing in stocks and shares” from Dr. John White talks about some basic concepts related to stocks.
First, the author explains what a share represents for the investor, which is a part in the company´s dividend and the right to vote in the Annual General Meeting. In some companies there are non-voting shares, although 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. Nowadays there are very few non-voting shares.
Shares normally have a nominal value that is the asset value of the company, when shares are sold in the stockmarket this value changes. All the stocks a company has are known as the issued capital of the company.
the dividends are part of the company´s profit that are given to the shareholders. The other part of the profit is for the company´s growth.
If you divide the earnings of a company by the number of shares it has, you get the P/E (price to earnings) ratio that measures the number of years that are needed to pay for the current share.
To end up with, Dr. White explains what the yield is, another measure of a company´s achievements, it is expressed as a net percentage of the current share price, and usually is lower than the interest, because shares are more risky but have a higher return than bonds.

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