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SHARES

The content of the website http://www.howtobooks.co.uk/family/stock-shares/ is based principally in the term shares. It describes concepts related to shares, and very important measure of a company performance. I explain the concepts in several parts.
A share in a company gives the investor a share in its dividents and a stake in the company´s assets and property and a vote, proportional to the size of the investor´s holding, in the company´s business at its AGM.
Most shares have a normal value which originally represented the asset value of the company. There are in extence some non-voting shares for certain companies. These shares normally enjoy most of the benefits of other shares, but the holder has no vote in the company´s strategy.

The dividend of the company is that proportion of its profits paid to its owners, the shareholders. Normally a company will pay only part of its profits as a dividend. The remainder is retained to fund internal growth of the company. The number of times that a company could have paid its net dividend is the cover of the dividend.

The company´s profits are known as its earnings. When the earnings are divided by the number of shares in existence, we get the “earning per share”. The P/E ratio measures how many years of earning per share at the current share price would be needed to pay for the share.

And finally, another important measure of a company´s performance is its yield. The yield is typically expressed as a net percentage of the current share price. The yield in each country are usually lower than the interest which could be more safely obtained by investment in local bond.

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