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The article is taken from the book “Stocks & shares” written by Dr John White. It includes the definitions of several concepts related to the stock market such as the following:

Definition of share: A share represents a stake in a company’s net assets (cash-in-hand, land, buildings, stocks etc. less the liabilities). Shares give also the right to vote in the annual meeting in proportion to the size of the investor's holding.

Nominal share value: It is the issued share capital of the company. But when the shares are sold in the market at a market value it reflects the earnings potential of the company. The company’s shares are also known as its equity or stock.

Non-voting shares: These shares normally enjoy most of the benefits of normal shares, but the holder has no voting rights enabling control of the company to be retained in the hands of the founding “family”. Obviously they are traded at a lower price than the voting stock.

Dividends: The dividend of the company is that proportion of its profits paid to the shareholders. The rest is retained as reserves to fund the internal growth of the company or to pay futures dividends. The relation between the total earnings and the amount of dividend paid is “the cover” or number of times that a company could have paid its dividend.

P/E Ratio (Price to earning ratio): This ratio measures how many years of earnings per share at the current share price would be needed to compensate the amount paid for the share. For example P/E of 10 means that ten years of earnings will pay for the price of the share and thereafter all dividends will be pure profit.

The Yield: Another important measure of a company's performance is its yield usually expressed as a percentage of the share price. The article provides the examples of the long term average yield in the UK around 3.6 per cent, 2.8 per cent in the USA or 1.0 per cent in Japan.

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