The following essay is extracted from "Investing in Stocks & Shares":

A share represents a part of the company's assets. The shareholders receive dividends based on a percentage of their money invested. Also it gives the right of a proportional vote at the Annual General Meeting (AGM).
The assets of the company are cash-in-hand, property and the stock of raw materials and work-in-hand.
The shares normally have a nominal value which represents the assets value of the company, as well as there ability to make money and be sold at the Stock Market.
There is another kind of shares, usually known as "A" shares. These shares do not incoporate the right to vote, so the holder cannot "intrude" into the company's strategies. In this way, the whole control of the company would be in the hands of the founding family. However, these non voting-shares are getting unpopular and out of fashion.
The proportional of the company's profits that the holder receives, is the dividend. The company won't pay the whole dividend, but will keep a part of it inside, kept as a reserve. The reserves are the difference between net assets and shared capital. The number of times that a company pay its net dividend is the cover of the dividend.
The company's profits are its earnings. When the earnings are divided by the number of shares, we obtain the earnings per share. The P/E (price to earnings) ratio measures how many years of earnings per share at the market value would be needed to pay for the share. Not all the earnings are considerd profits so they aren't paid as a dividend. It is thought that the earnings and dividends will rise each year, reducing the cost and being just pure profit.
Also, we can look at a company's performance, by measuring its yield, its efficiency. The yields is the percentage (after income tax) of the current share price. The common yield in the UK is around 3.6 per cent net.

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