Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Shares

What it is:

Shares are units of ownership in stocks and partnerships.

How it works (Example):

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.

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

Why it Matters:

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.

Related Terms View All
  • Z
    On the Nasdaq market, for example, the letter Z after the ticker (an XYZ Company security...
  • Minor Downtrend
    The minor trend is the last of the three trend types in Dow Theory -- the other two types...
  • Vagit Y. Alekperov
    Born in 1950 in Baku, Azerbaijan, Alekperov is the youngest of five children. He went...
  • Smartphone Banking
    Smartphone banking typically operates across all major U.S. cellular service providers in...
  • Minimum Margin
    When a trader engages in trading on margin, the margin account must contain at least $2,...