In this extract from the book “investing in stocks & shares”, Dr John White explains what a share is and the different ways of measuring how much is a share worth. Dr White begins explaining what a share is, an asset which gives you certain rights over a company (such as receiving dividends or voting), that are proportional to the amount of shares you own. Afterwards he explains that its not the same the nominal share value than the market share value distinguishing between two types of shares that bare different rights and therefore different prices.
After giving this brief explanation, the author talks about the price to earnings ratio and the yield of a share (in terms of the company Great Universal Stores) as a way of measuring a company’s performance. The P/E Ratio measures how many years will be needed to pay the share value .On the other hand the yield is a percentage of the actual price of the share (which is directly related to the risk or safety of investing in a certain business)

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