MEPX
Chapter 1 of 12All chapters
  1. 1What a share is
  2. 2Exchanges and brokers
  3. 3How a price is set
  4. 4Order types
  5. 5What it costs
  6. 6Reading a company
  7. 7Dividends and returns
  8. 8Indexes and funds
  9. 9Risk and diversification
  10. 10Market cycles
  11. 11Psychology and mistakes
  12. 12Learning further

Chapter 1 of 12

What a share is

Ownership, not a loan.

A slice of a company

A share is a unit of ownership. Owning one makes you entitled to a slice of whatever the company is worth and whatever it chooses to pay out, in proportion to how many shares exist.

  • Shares carry no promise of repayment. If the company fails, owners are paid last.
  • Bonds are the other side: a loan to the company, with interest and a repayment date.

Why companies sell them

Issuing shares raises money without taking on debt, in exchange for giving away part of the company. Anyone buying later is buying from another investor, not from the company.