SHARES AND DIVIDEND
Purchase and sale of shares of different companies have become very popular these days among large number of people. People purchase and sale large number of shares to earn maximum profits.
COMPANY
Joint stock company : In order to run the business several persons combine to form a joint stock company to run a business.
Limited company : A limited company is one which is registered with the gov- ernment.
Capital stock : The capital stock is the total money invested by the company.
Share : The capital stock is divided into a number of equal units each of Rs.10 or Rs.100. Each unit is called a share.
Shareholder : The persons having shares of a company are called sharehold- ers. Shares generally are of Rs.10, Rs.100 etc. Shares of Rs.10 are called Rs.10 Shares, but Rs.100 share are generally called Rs.100 stock.
Nominal Value : Every sharholder gets a certificate from the company for nomi- nal value or face value of the stock or share.
Market value : The value of a share in the market is called its market value.
Dividend : The part of the profit which a share holder gets from the company is known as the dividend.
Note : (1) The par value of the share remains fixed while the market value goes on increasing or decreasing.
(2) Company declares a dividend on the par value of the shares every year.
Different Kinds of shares :
- Preference shares
- Equity
- Deferred
Brokerage : Commision taken by the broker on the shares is called brokerage.
Brokerage is charged from both the buyer and seller. Brokerage is calculated on the market value of shares.
Shares are sold or purchased by the shareholders or brokers.
Debenture : Debentures are a debt of a company. A debenture holder receives interest on the debentures at a fixed rate of interest. It does not see the profit or loss of a company.
Note : (1) The interest on a debenture is always calculated on the par value of the share.
(2) The brokerage on sale or purchase of a debenture is calculated on their market value.
Share market got a big boom in India a few years ago, but now-a-days it is in a low key.
