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what is the exact meaning of shares?

In general a share is a part of the ownership of a company. A person who buys a portion of a company’s capital becomes a shareholder in that company’s assets and as such receives a share of the company’s profits in the form of an annual dividend. Lucky or astute investors may also reap a capital gain as the market value of the shares increases.
In finance a share is a unit of account for various financial instruments including stocks, mutual funds, limited partnerships, and REIT’s. In simple Words, a share or stock is a document issued by a company, which entitles its holder to be one of the owners of the company. A share is issued by a company or can be purchased from the stock market.
By purchasing a share you can earn a portion of the company and by selling the shares you get capital gain. So,the return is in the form of  dividend plus the capital gain. However, there is also a risk of capital gain incase you sell the share at a lower price.
A company’s stock price is not necessarily based on the worth of the company but also reflects the investors thinking on the stocks of the company. ” For example, companies that are growing quickly often trade at a higher price than the company might currently be “worth.” Stock prices are also affected by all forms of company and market news. Publicly traded companies are required to report quarterly on their financial status and earnings. Market forces and general investor opinions can also affect share price.
Quick Facts on Stocks and Shares
•    Owning a stock or a share means you are a partial owner of the company, and you get voting rights in certain company issues
•    Over the long run, stocks have historically averaged about 10% annual returns However, stocks offer no
guarantee of any returns and can lose value, even in the long run
•    Investments in stocks can generate returns through dividends, even if the price
How does one trade in shares ?
Every transaction in the stock exchange is operated through licensed members called brokers.
To trade in shares, you have to approach a broker .However,  most of the stock exchange brokers deal in very high volumes of stocks , they generally do not really entertain small investors. These brokers have a network of sub-brokers who provide them with orders.
The general investors should identify a sub-broker for regular trading in shares and place his order for purchase and sale through the sub-broker. The sub/broker will transmit the order to his broker who will then execute it .
What are active Shares ?
Shares in which there are frequent and day-to-day dealings, differentiated  from partly active shares in which dealings are not so frequent. Most shares of leading companies would be active, particularly those which are sensitive to economic and political events and are, therefore, subject to sudden price movements. Some market analysts define active shares as those which are bought and sold at least three times a week. Active shares are easy to buy and sell .

Posted by On 20/10/2009 Filed in: General Tags: , , , , , , , ,
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3 Responses to "what is the exact meaning of shares?"

  1. Akki says:

    helped a lot.liked it

  2. abirami says:

    its a very gud info and very useful….gud explanation…..but for this generation it is not enough..b’coz share market is a familiar thing so need more current info about share market……..

  3. B.UDAI BHASKAR says:


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