Stocks and Shares. Key Vocabulary
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.