Equities

 

A share is a financial instrument that indicates the owner's participation in the ownership of a business. In other words, shares are securities of equal value which entitle specific rights to their owners.

One of the basic rights is the participation in the distribution of profits of the company. These are profits which have not been used for reinvestment in the company but distributed to the shareholders, commonly known as a dividend. Although the divident can represent a good source of income to the shareholder and is an important criterion for buying the shares, it is not the primary source.

The most important feature of shares of listed companies is that they are traded in regulated stock exchange markets and their price varies according to the laws of demand and supply. When an investor buys a stock, he basically hopes for a rise in its price. This is the basic criterion for deciding to buy the share.

The trading of shares is regulated and supervised by the stock exchange in which the shares are listed. Stock Exchanges around the world establish rules intended to protect traders including setting specific hours of operation.

Shareholders have the right to benefit from the growth and profitability of a company without having the capital needed to wholly own it, and companies in turn have access to funds at a relatively low cost.