Share03.18.08

These days the word shares and stocks are used interchangeably and mean almost the same thing. In short, shares are documents issued by a company, possession of which entitles you, the possessor, a holding stake in that company. It is also a unit used to express financial instruments like stocks, mutual funds, equity and the like.Possession of a share can be either by buying from the open share market or through issue by the company itself. Possession of a share entitles you to a dividend, which is a part of the profit made by the company. However you can sell the share anytime and get a capital gain which is essentially selling price minus the buying price. At the same time, you make a loss if you sell it at lower than your buying price.

Share/Stock price of a company is essentially decided by what the investors think about the company than be decided on the actual “worth” of the company. The price is also dependent on a lot of external news such as global sentiments on the industry operated in by the company, company news, market news and even rumors at times!

Quick Points to be noted:

  • Owning stocks/shares in a company means that you are a investor in the company and entitles you to take part in the decisions taken by the company.
  • You are entitled to a part of the profit, at the same time you run a risk of occurring losses if the company stock price goes down.

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