TOPIC :

SHARES

Introduct ion :

Shares can be broadly divided into : Equity Shares and Preference Shares

Types of Shares :

referred to as ordinary shares and in Indian context it is defined by section 85 ( 2 ) of the companies act 1956 . They are the real risk - takers and care - takers of the company and they enjoy the right of voting .

Equity Shares : Equity share is also

Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders , and which takes precedence over common stock in the event of liquidation . Like common stock , preference shares represent partial ownership in a company , although preferred stock shareholders do not enjoy any

Preference shares :

Advantages of Preference Shares : Tax - free status Consistent dividend payments Frequency of payments

Disadvantages :
It will not move like ordinary stocks . It might not be the asset type for investors looking for explosive gains .

Types Of Preference Shares :

Cumulative and Non cumulative Redeemable and Non Redeemable Participating Preference Share and non participating preference shares Convertible and Non

Other types of Shares :

Equity Shares can be classified as follows :

Named after the highest - value gambling tokens in a casino , blue chips are the largest companies whose shares are traded on major stock exchanges . Blue chips tend to be high profile , house - hold name companies with

Blue Chip Shares :

Blue chips share several important characteristics including : An established record of

stable earning power over several decades An equally long record of uninterrupted dividend payments to common stock holders A history of regular increases in the dividends payable to each share Strong balance sheets with a

 High credit ratings in the bond and commercial paper markets Large size relative to American businesses as a whole in terms of revenue and market capitalization Diversified product lines ( e . g ., General

Income shares :

The term can refer to shares bought in anticipation of an above average income being produced . Also referred to as high yield shares . This normally means that the investor has chosen shares in companies that have a history of paying consistently high dividends . There is no guarantee that the companies will continue to provide the

Cyclical and Non cyclical share :

These terms , cyclical and non - cyclical , refer to how highlycorrelated a company's share price is to economic fluctuations . Non - cyclical stocks repeatedly outperform the market when economic growth slows , while cyclical companies are highly correlated to the

Cyclical vs . Non Cyclical Company :

Growth Shares :

Shares issued by a firm with a consistent record of above average earnings . Such shares are expected to trade at an increasing value over an extended period . In many ways , a growth share is the

Speculative Shares :

Speculative shares are usually small companies , often newly formed . These companies are almost always focused on delivering growth fast . As investments , speculative shares are high risk due to a lack of financial strength or track record in earnings and dividends .

Value shares :

A value share is one that looks cheap . Value shares tend to have low PE ratios and high dividend yields . As such , value shares are often either defensive shares ( which typically have low PE ratios ) or income shares ( which have high dividend yields ). However , growth shares can

Quality shares :

Probably the most important class of shares are quality shares . Quality shares can be found in any of the above categories . Look for great management , a rock - solid business and finances , and a track record of growth in profits and dividends .

Shares can also be classified as :

Large Cap Mid - Cap Small or Micro Cap

CONCLUSION :