Investments. Characteristics of shares (most important)

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Investments. Characteristics of shares (most important)

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SHARES DESCRIPTION

Promotion - this is an issuance security that secures the rights of its owner (shareholder) to receive part of the profit of a joint-stock company (JSC) in the form of dividends, to participate in the management of the JSC and to part of the property remaining after its liquidation.

The most significant for the investor from the standpoint of the difference in their investment qualities is the division of shares into ordinary and preferred.

The risk of using ordinary shares is balanced by the fact that income on them is not fixed, but represents an appropriate share of profits.

Shares are classified:

1) according to the features of registration and circulation: nominal; bearer;

2) by the nature of obligations: simple; privileged;

3) by form of ownership of the issuer: state-owned companies; non-state companies;

4) by region: domestic issuers; foreign issuers.

The basis for the exercise of rights under an ordinary share is its nominal value.

It is not so much its actual price as an indicator of the volume of rights assigned to its owner. Par value is rarely used for the purpose of buying and selling shares. Book values and market prices apply.

The market price of a share may differ from its face value. It consists of ideas about the reliability of the business that finances these shares.

Ordinary shares have the following advantages: they can receive higher dividends during periods of efficient operation of the JSC; their owners influence the economic process by participating in the management of the JSC; their liquidity in the stock market is higher than that of preferred ones; their income is linked to inflation in the country; Shareholders participate in the development of the JSC's dividend policy.

Advantages of preferred shares: provide their owner with a stable income in the form of dividends; payment on them is carried out regardless of the results of the economic activity of the JSC in the reporting period; fully protected from systematic risk and partially from non-systematic.

For an investor, it matters what profit a share brings, what are its prospects.

Investors in stocks are attracted by:

1) the right to vote in exchange for invested capital;

2) the right to income in the form of dividends;

3) capital gain when the share price rises in the stock market;

4) additional benefits provided by JSC to its shareholders;

5) the right of preemptive acquisition of the following issues of shares;

6) the right to a part of the JSC's property remaining after its liquidation.

Author: Kuznetsova S.A.

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