Definition: The capital of a company is divided into shares. Each share forms a unit of ownership of a company and is offered for sale so as to raise capital for the company.
Description : Shares can be broadly divided into two categories – equity and preference shares. Equity shares give their holders the power to share the earnings/profits in the company as well as a vote in the AGMs of the company. Such a shareholder has to share the profits and also bear the losses incurred by the company.
On the other hand, Preference shares earn their holders only dividends, which are fixed, giving no voting rights. Equity shareholders are regarded as the real owners of the company. When the shares are offered for sale directly by the company for the first time, they are offered in the primary market, whereas the trading of shares takes place in the secondary market.
Share is a part of the ownership of a company. Person who buys a portion of a company’s capital becomes a shareholder in that company’s assets and as such receives a share of the company’s profits in the form of an annual dividend may also reap a capital gain as the market value of the shares increases. A share is issued by a company or can be purchased from the stock market. There is also a risk of capital gain in case you sell the share at a lower price.
- Owning a stock or a share means you are a partial owner of the company, and you get voting rights in certain company issues
- Over the long run, stocks have historically averaged about 10% annual returns However, stocks offer no guarantee of any returns and can lose value, even in the long run.
Every transaction in the stock exchange is operated through licensed members called brokers.
To trade in shares, you have to approach a broker . However, most of the stock exchange brokers deal in very high volumes of stocks , they generally do not really entertain small investors. These brokers have a network of sub-brokers who provide them with orders .
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