Let's kick off today's lesson on what stocks are
#education
Imagine you own a slice of a company. That's what happens
when you buy a share. Stocks are how companies distribute
the cash they raise to run their operations. This cash is called
capital or equity.
↑1/20
So, if a company divides its capital into 100
shares with a nominal value of £1, its issued capital would be £100.
↑
2/20
However, potential shareholders might be willing to pay more
for these shares, let's say £1.50 each.
Therefore, its market value would be 150 - 100 ×
3/20
"Shares can be worth investing in for two reasons.
First, their value might increase, as in our example. If you’re
the investor, that means you’ll gain capital appreciation when you sell them. Second, companies might also pay
dividends - a portion of their profits to shareholders.
4/20
#education
Imagine you own a slice of a company. That's what happens
when you buy a share. Stocks are how companies distribute
the cash they raise to run their operations. This cash is called
capital or equity.
↑1/20
So, if a company divides its capital into 100
shares with a nominal value of £1, its issued capital would be £100.
↑
2/20
However, potential shareholders might be willing to pay more
for these shares, let's say £1.50 each.
Therefore, its market value would be 150 - 100 ×
3/20
"Shares can be worth investing in for two reasons.
First, their value might increase, as in our example. If you’re
the investor, that means you’ll gain capital appreciation when you sell them. Second, companies might also pay
dividends - a portion of their profits to shareholders.
4/20