What are Shares?

Answer:
Shares, equities, and stocks are words that describe a portion of ownership of a company.

When you own a share in a particular company, you are a part owner of that company and have a claim to a piece of the company’s profits and assets.

Companies issue shares to raise money. This type of financing allows the company to raise money without having to pay interest or pay it back. Instead, shareholders buy shares in the company hoping that their investment will grow as the company’s value increases. In addition, some companies pay a portion of their profits to shareholders in the form of a dividend.

If you own one or more shares in a company, you are a shareholder. All of the shareholders own the company collectively. Each shareholder has a claim to a portion the company’s assets in relation to how many shares are owned.

For example, if you own a single share of a company, your portion of ownership is dramatically smaller than someone who owns 20% the company’s shares.

As a shareholder, if the company pays dividends, you will receive a portion of the company’s profits for each share you hold. The more shares you own, the more dividends you will receive.