Share

A Share is a document which is issued by a company, which entitles shareholders to be one of the owner of the company. A share is issued by the company or it can be very easily purchased from the Stock market. By selling the shares we can get capital gain and by owning we can earn a portion. A Company’s share price depends upon what investors think about the share, not necessarily what the company is “worth”. Some of the companies that are growing quickly often trade at higher price. Stock price of a company is also affected by market news. Basically a capital is subdivided into shares. We can very easily calculate the capital of any company. Capital is the difference between Assets and Liabilities. Examples of Assets are The machinery, Furniture, Buildings etc. Bank loans, Money Owned to people from whom things  have been bought on credit. Capital is the total amount an owner has in the business.

For Example: if the required capital of a company is Rs. 5,00,000 and is divided into 50,000 units of Rs. 10 each, each unit is called a share of face value Rs. 10. A share may be of any face value depending upon the capital required and the number of shares into which it is divided.

When you invest in share, you do not invest in market. You invest in equity shares in the market. Owning shares means having a share of a business without bothering about managing it.

Types of Shares:

There are basically various types of Shares.

ü  Preference Shares.

ü  Equity Shares.

ü  Bearer Shares.

ü  Registered Shares.

Preference shares are the shares that give political right. Equity Shares enjoy the classical rights. Equity Shares do not have any preferential rights. Bearer Shares are the Shares where the owner is who posses them. Registered Shares are assigned to a determined name of a person.

Important facts:

• Owning a stock means you are a partial owner of the company.
• Investments in stocks can generate returns through dividends.
• Share offer no guarantee of any returns and can lose value, even in long run.

Shares have number of Advantages which make it a desirable investment vehicle:

·         Shares offer limited legal liability.

·         Most shares are liquid.

·         Shares offer two ways for their owners to benefit- by capital gains and by Dividends.

·         Common share has the potential to deliver very large gains.

·         Shareholders have the right to vote.

·         Shareholders are able to buy as many new stocks as possible.

Disadvantages of Shares:

• Prices of shares Fluctuate a lot.
• There is no positive link between inflation and corporate profits.
• Shares require more Hardwork and Analysis.
• Some companies go broke therefore you need to diversify a lot.