Stock & Bond
Author： Yina Cheung
HKU Wealthskey Content Writing/ Sharing Competition
I would like to introduce shares which gives the owner a share of a company. It also gives the shareholder voting powers at general meetings. The shareholder, therefore, has a (limited) say in the management of the company. Shareholders appoint the directors who in turn appoint the management.
We invest in shares for capital appreciation in the share price or value and for dividend income. Dividends are usually paid every six months if the company is profitable and if it does not need to invest all the profits in capital projects.
There are different types of shares:
- Ordinary shares, that ranks after debt holders and preference shares when a company is liquidated.
- Preference shares have the first right to receive a dividend, if a dividend is declared. This dividend never varies and is a fixed percentage of the share price. Preference shares normally carry no voting rights.