When
a company needs to raise money in order to grow, it can choose
between two different options. It can issue shares
which can be bought by the general public. These shares are
known as equities or ordinary
shares, and are the most common form of share. When you buy
shares in a company, you become a shareholder
and own a part of that company. As part-owner of a company,
you can therefore make or lose money depending on the company's
profits. If the company
does make profits, it pays a sum of money per share, known
as a dividend, to its
shareholders usually twice a year. Companies can also borrow
money from the bank or from the general public by issuing
bonds which are loans
with a fixed amount of interest to be paid each year.
