A share is a single unit of ownership in a company or financial asset.
It is essentially an exchangeable piece of value of a company which can fluctuate up or down, depending on several different market factors.
Companies divide capital into shares as a means of raising capital. Shares are also known as stocks.
There are two main types of shares: common shares, which British people call ordinary shares, and preference shares.
Ordinary shareholders have voting rights and receive dividends according to profit levels. Whereas preferred shareholders don’t usually have voting rights but have priority in the payment of dividends.
The value of a share that a company issues depends on its face value – the capital of a company divided by the total number of shares. A firm’s authorized capital refers to the maximum amount in shares it is allowed to sell.
When you buy a share in a company, you become part-owner of that firm.
People who own shares in a company are called shareholders or stockholders. Shareholders receive income from the shares they own on a routine basis – these are called dividend payments.
Shares are exchanged through a stockbroker – who acts as the middle man or woman.
