This article is extracted from a book called “Investing in stocks and shares” wich explains the basic components of shares and stocks.

First of all, the author says that a share gives the shareholder a part of a company, it also gives him the right to receive dividends and the right to speak and vote at the General Meetings of Shareholders.

He also explains that the assets are all the properties a company has and they can reduce liabilities.

Most shares have a nominal value.The shares of a company represent the value of the company or the ability to make money.

The issued share capital of the company is the sum of all the value of the emitted shares.

There are some non-voting shares wich gives the shareholder more beneficts than other shares but does not give the holder the vote in the company’s strategy. This shares exist for controling the company with few people. Non-voting shares are not appropriate for major investors.

The dividend is the proportion of profits splited into the owners, the remainer will stay in the company for it’s growth. The number of times that a company could have paid its net dividend is the cover of the dividend.

There are other ways of measuring the company's performance, such as the P/E Ratio and the yield.

The company's profits are known as its earnings. We can calculate “the earnings per shares” dividing the total earnings by the number of shares in existance. The P/E ratio measures how many years of earnings per share would be needed to pay for the share. It is well known that not all of the earnings are paid as dividend, however the general expectation is that earnings and dividens will rise every year.

The yield is expressed as a net percentage of the current share value

The average yield in the UK is around 3.6 per cent net, in other countries like USA the average yield is 2.8 per cent.

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