Understanding Shares
14 Jan 2015

Understanding Shares

Shares are units of ownership in stocks

14 Jan 2015

Shares are units of ownership in stocks and partnerships.

The unit of ownership of a company is usually referred to as a “share.” It is a single unit that represents equity in the company’s capital structure. The owners of shares are called “shareholders.” The distribution of shares in a company indicates the distribution of ownership in the company.

shares shares Understanding Shares dividends
A share’s value in a company or an investment is based on the price at which a share is sold in the market. One basic measure of a company’s worth is market value, which is the number of outstanding shares multiplied by the price of a share.

Market Valuation = Number of Shares Outstanding X Share Price

Investors are granted a variety of rights based on their ownership of shares in a company or investment. Most important, however, their shares represent equity in the company, and, as a result, may have tax consequences when their equity is sold.

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