Shares1002

This extract from the book investing in stock&shares explains briefly some concepts related with shares. A share ( stock or equity) gives the owner a share of company’s dividend, vote in its (AGM) and asset’s ownership, in proportion with the amount of shares. By assets it’s understood cash-in-hand, stock of row materiales, property,work in hand less the liabilities to creditors (borrow or pay).Usually shares have a nominal value that shows assets value of the ecompany. This shares can be sold at difference price from nominal value representing potential earnings.Also there are non-voting shares which gives most of the rights of other shares,except the right to vote. The original idea was to keep control of the company in the hands of the founders, but nowdays these sahres are unpopular and traded at a low price.

Moreover the dividend of the company is that quantity of its profits paid to its shareholders. Usually comapnies pay only a part of profits to rise reserves.The number of times that a company could have paid its net dividend is the cover of the dividend. The earning per share is earning divided by number of shares.The P/E (price to earnings) ratio measures how many years of earnings per share at the current share price would be needed to pay for the sharebut not all of the earnings are paid as dividend, based on earnings and dividends will rise each year, reducing the repayment time .Finally other concept is the yield which is typically expressed as a net percentage of the current share price. For example UK yield is 3.6%Yields in each country are usually lower than the interest because the lower return from shares shows potential growth of dividend payouts .

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