What is a share?

We have all heard about the shares on the stock exchange market. But what exactly is a share? . A share represents participation on the capital of a business. The shareholder; owner of the share is in reality an owner of a percentage or a fraction of the company. The more shares you own, the greater is your participation in the capital. For example: In the United States, the person who owns 5% or more shares of a company receives the consideration of majority share holder and as such must be registered in the securities <exchange commission (SEC).

The term share is also applied to the title or certificate that represents it. He who owns 30 shares of a company is given a certificate that represents precisely that: 30 shares.

Although most of the shares can be issued under the form of a certificate, the usual is for the transactions to be done through a formula known in the Anglo Saxon markets as street name, that is, at the name of a stock exchange agency and assigned to separate accounts of each of their clients.

The rises and declines of prices or quotations of a share are fundamentally determined by the success or failure of the management of the company. If its managers are good enough to obtain profits, the value of the company rises and so does the value given to its capital, that is, its shares. When the value of the company increases, the situation of those who have invested in it may report important profits.

However, it is advisable to act carefully. Many professional investors sustain that to be successful in this activity you have to know how the business world works, adding also, that this knowledge is essential for selecting with a minimum of security the most appropriate investment to our needs and objectives.