In financial markets, a share is a unit used as mutual funds, limited partnerships, and real estate investment trusts. Share capital refers to all of the shares of an enterprise. The owner of shares in the company is a shareholder of the corporation.
Shares are pieces of ownership of an enterprise or company. When you buy them, you become an investor who owns a piece of a company’s losses or profits. Your ownership of the listed company and the profit is equal to the total number of sharesyou own.
Shares represent equity ownership in a corporation or financial asset, owned by investors who exchange capital in return for these units.
Common shares enable voting rights and possible returns through price appreciation and dividends.
Preferred shares do not offer price appreciation but can be redeemed at an attractive price and offer regular dividends.
Most companies have shares, but only the shares of publicly-traded companies are found on stock exchanges.
You also become a shareholder of the company with the expectation of making a profit. Share profits come through gains in bonuses, share prices, rights, and dividends, and other methods of income generation that are used by the company.
Shares represent the corporation’s owners’ residual claim on assets after all obligations and debts have been paid.
Companies or enterprises sell shares to borrow or raise money from institutions, governments, and ordinary citizens. The intention is to expand their activities so that they can make even more profits.
When you buy their shares, you have the power or right to influence or make decisions about how the company runs, as both the owner and lender of money to the company. By lending money, you expect profits as a reward for enabling the company to expand its business activities.
Note: It is worth mentioning that you do not have to own shares on your own.
The Nairobi Securities Exchange (NSE) allows two or more people to pool their money together in one investment portfolio called a pooled fund or simply a fund. A fund buys a specific number of shares that are picked out and managed by fund managers.
By putting money into a fund, you will not have to work on choosing the right investments or decide which companies to invest. Since you will not buy the shares directly as an individual, you will not have the power or the right to vote on certain company decisions. Only direct shareholders enjoy these rights.
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