What are Shares?

Shares are a unit of account in corporations, and include stocks and investments. Common and preferred are the two main types of shares. Shares are issued to raise money for the company. Along with shares, shareholders get other benefits from company like the rights to get dividends or the right to share in the capital. Shares vary, and so do entitlements that shareholders get.

When shareholders own shares in a corporation, this gives the shareholder right to equal profit allotment, in the form of dividends. It does not mean that the shareholder has control of management of the business. When dividends are issued, shareholders used to receive a paper stock certificate detailing the number of shares owned. Electronic stock records have since simplified the process.

Shares usually mean corporation stock, but shares can also represent a claim to other assets such as mutual funds. Share price is calculated by dividing market capitalisation (company value) by the number of shares issued by the company.

The public can participate in the sharemarket by purchasing shares through a stockbroker. They can choose to either invest and park their money or undertake some share trading.