Posted by: admin : Category: Stocks and Shares are certificates granting partial ownership in a company. Some shares grant voting rights, allowing their owner to participate to some degree in the management of the company. Typically, this control will be exercised through voting procedures at a shareholders’ meeting. In this ultra modern world many a times this meeting helds through web conferencing, video conference or audio conferencing.
Stocks are regarded as investment vehicles. The return to investors comes in two forms : dividends and capital gains. Dividends are the sums of money which the company chooses to pay out to its shareholders from profits it has made. The management of the company enjoys broad discretion in the amount which will be paid out on dividends. Some profits will be retained for investment purposes, for example. Capital gains are achieved when the stock rises in value, allowing the owner of the stock to sell it for more than it cost to buy it in the first place.
It has become customary to grant employees of companies the right to buy shares in the company on favourable terms. Often, this comes in the form of stock options, which is the legal right to buy a share at a specific price. Someone with these options can then wait until the price of the stock rises higher and then buy the stocks at the already agreed lower price and immediately re-sell them. The theory behind the stock options movement is that enjoying partial ownership of the company motivates their employees to perform better in their jobs.