What is a share and what are the types of shares

Share Kya Hai: You must have heard about the share market. Today in this article we are going to tell you about the smallest unit of stock market share. In this article, we are going to give you many basic information related to shares.

 

In today's article, you will get to know what is Share, what are the types of shares, why shares are issued, how shares are formed, how to buy shares and what are the advantages and disadvantages of buying shares.

 

Whenever you want to learn about the share market, first of all, you are told about the stock, so let's start without delay and understand this article and understand what is a share .

 

What is Share

 

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What is 1 Share

2 Why Shares Are Issued

3 How shares are formed

4 Types Of Share 

4.1 #1 – What is Equity Share

4.2 #2 – What is Preference Share

4.3 #3 – What is DVR Share

how to buy 5 shares

6 Advantages Of Buying Shares (Advantage Of Share )

7 Disadvantage Of Share 

8 Differences Between Share And Stocks

9 Share FAQs

10 Last Words: What is Share 

10.1 Related Articles 

 

Share means to share or share, when an investor buys shares of a company, he becomes a partial shareholder of that company. A share is evidence that proves that the person holding the share owns some percentage of the company by virtue of holding the share.

 

The investor can buy the shares of the listed company on the stock exchange and can earn a profit by selling the shares when the share price rises. Shares are the smallest part of the company's capital.

 

Shares can be defined as “The smallest part of the capital formed by dividing the total capital of a company into several equal parts is called share”.

 

Why Shares Are Issued

Any company needs money or funds to expand its business. But 99 percent of the companies do not have the funds that they can invest in their business. To raise this fund, the company issues shares to the general public. The percentage of shares that an investor buys in a company, he gets the share of that percentage in the company.

 

By withdrawing the shares, while the company raises funds for itself, the investor gets some percentage of stake in the company by buying the shares. In this, both the company and the share get benefits.

 

When a company issues its shares for the first time, it is called IPO (Initial Public Offering). After bringing the IPO, the shares of the company are listed in the stock market, then investors buy and sell shares from the secondary market.

 

How shares are made

The owner of the company makes some percentage of the company public to increase investment in his company. To bring an IPO, the company has to follow the guidelines of SEBI. For any stock to be listed on the main stock exchange, it fulfills the conditions. The company issues its shares to the general public by listing itself on BSE (Bombay Stock Exchange) or NSE (National Stock Exchange). After this, the general public buys the shares of the company and earns profit by doing share exchange.

 

Types of Share

There are mainly three types of shares –

 

• Equity Share
• Preference Share
• DVR Share(DVR Share)

 

#1 – What is Equity Share

Equity Share is also called Ordinary Share (Ordinary Share). Most of the companies listed in the stock market issue Equity Share. Equity shares are traded more than other stocks because almost all companies issue equity shares to the general public.

 

In such shares, investors have the right to vote and share profits in the company's meeting. Profits are paid to the equity shareholders after the dividend is paid to the preference shareholders. Equity shareholders do not have any right to claim in case of bankruptcy of the company.

 

#2 – What is Preference Share

As the name suggests, Preference Share Holder is given more priority than Equity Share Holder. However, such shareholders do not have voting rights in the company meeting.

 

Preference is given in paying dividends to Preference Share Holder, Dividend is first distributed to Preference Share Holder and then to other Share Holder. But the rate of dividend on these shares is fixed.

 

Even in the event of the closure of the company, the Preference Share Holder is first paid. The price of a Preference Share is less than the current price of the Equity Share.

 

#3 – What is DVR Share

The full name of DVR Share is Differential Voting Rights. DVR shareholders have fewer voting rights as compared to equity shareholders. To reduce the voting rights of such shareholders, the company pays additional dividends. The price of DVR shares is less than that of Equity shares.

 

How to buy shares

To buy shares, you need a platform and brokers provide that platform. You cannot buy shares directly from the stock market. You need a medium to buy shares. Stock brokers are members of BSE or NSE.

 

You have to get your Demat account created by a broker, without a Demat account you cannot invest in the stock market. Brokers provide you with a platform from where you can invest in the stock market.

 

Our suggestion is that you open your Demat account from Discount Broker only. Discount Broker charges very less fees for opening a Demat account. Many brokers also open your Demat account absolutely free of cost.

 

We have suggested some Popular Discount Broker below –

 

• Upstox App
• Zerodha App
• Groww App
• Angelone App

 

Benefits of buying shares (Advantage of Share )

There are many benefits of buying shares such as –

 

• If the company earns profit in the future then it also gives some part of the profit to its shareholders which is called a dividend.
• The company also gives additional shares in the form of bonuses to its investors from time to time.
• If the company earns good profits in the future, then its share prices also increase, due to which good money can be earned in the stock market.
• The company issues some rights to its shareholders, the benefit of which is available to all the shareholders in proportion to the shareholding.

 

Disadvantage of Share 

Shareholders also have to bear the loss of buying shares, the disadvantages of shares are as follows –

 

• If there is a loss in the future in the company, then the share price also falls, due to which you also have to bear the loss.
• If the company goes bankrupt, the shareholders do not get anything. Nor can they claim for it.
• When the company is closed, the shareholders are paid last.

 

Difference between Share and Stocks

Stocks represent partial ownership of several companies by the investor, while shares represent the partial ownership of one company by the investor.

 

When a person holds shares of several companies, you can say that he has stocks. But if someone has bought the shares of a specific company, then they only have the shares.

 

Share FAQ

 

What is meant by share?

Share means to share. A share is proof of the shareholding of a company, it proves that the person who has those shares has ownership rights in the company.

 

What are the words for a share?

Share is called an or part.

 

Why does a company issue shares?

Any company has to withdraw shares to increase investment in its business. Because no company can run without investment. As there is growth in the company, then the expenses of the company also start increasing.

 

Who are the Shareholders?

The person who buys the shares of the company becomes the shareholder of the company, that is, he becomes the owner of the company's shares. The person who buys the shares is called the shareholder.

 

Where to buy shares?

Buying shares is very easy in today's time, you can create your Demat account and buy company shares through mobile applications like Upstox, Zerodha, and Groww.

 

Last words: what is shared 

If you have read this article completely then you must have understood what is Share and why the company issues shares. Also, you must have understood the advantages and disadvantages of the stock.

 

There is always risk in the stock markets, so never invest in the stock market with incomplete knowledge. If you want to invest in the stock market, then first understand the stock market well, and after doing good research buy shares.

 

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