A share is a slice of a company
A company can be divided into equal slices called shares. If a company has 1,000,000 shares and you own 10,000 of them, you own 1 percent of the company.
Stock Market Basics · Lesson 1 of 10
What is a share?
Shares, owners, dividends and why a company would sell part of itself.
5 minutes · 7 questionsLesson 1 · Card 1 of 4
Read the complete lesson text
A share is a slice of a company
A company can be divided into equal slices called shares. If a company has 1,000,000 shares and you own 10,000 of them, you own 1 percent of the company.
Why companies sell shares
Selling shares is a way to raise money for growth without borrowing it. The people who buy become part-owners and share in the company's success, and in its risks.
How shareholders can earn
There are two ways. The company can pay out part of its profit as a dividend. Or you can sell your share later for more than you paid. Neither is guaranteed, and a share can also fall in value.
Owner or lender?
A shareholder owns part of the company. A lender, such as a depositor or bondholder, is owed money. If a company fails, lenders are generally paid before shareholders.