This text taken from the book ‘Investing in stocks and shares’ explains the concept of shares and other concepts related to them.

First of all, the writer explains the meaning of share and what it represents to an investor into a company. A share in a company gives the owner the chance of voting in its Annual General Meeting (AGM), receiving a dividend and having a stake in the company’s assets.
Secondly, the company’s assets not only refer to properties, but also to cash-in-hand and the company’s stock of raw materials and work-in-hand, less its liabilities to creditors.
Usually those shares have a nominal value that is the original asset value of the company. Another type of shares that don’t allow the shareholder to vote in the company’s strategy. These shares are denominated with the suffix ‘A’. The problem with these shares is that are unpopular and trade at a lower price than the voting stock.

Next, the dividend is the amount of the profits paid to the shareholders by the company. The company just pay a part of their earnings as a dividend and the rest is used to finance internal growth. The cover of dividend is the number of times a company could have paid its net dividend.

The ‘price to earnings ratio’ (P/E) is a way of measuring how many years of earnings per share would be needed to pay for that share at the current earnings per share ratio (earnings divided by the number of shares in existence). As the earnings are expected to increase every year, the repayment time of the share price is reduced.

Finally the text talks about the yield that is another way of measuring a company’s performance. It is commonly expressed as a net percentage of the current share price. The yield in each country is usually lower than the interest of local bonds, which are considered to be safer.

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