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Owners & Shares: key terms, formulas and examples

Owners hold shares and earn through dividends. Limited liability caps their loss at what they invested, and stock options reward staff with ownership.

Example

A 2-for-1 stock split halves the share price but not your total value.

Takeaway

Decide whether you want growth (reinvest) or income (dividends).

Key terms

Shareholder
A person or firm that owns shares in a company.
Dividend
A share of profit paid out to shareholders.
Stock options
The right to buy company shares at a fixed price, used as a perk.
Limited liability
Owners risk only what they invested, not personal assets.
Stock split
Dividing shares into more shares, lowering each price without changing total value.

Formulas

Dividend yieldDPS ÷ Price × 100
Earnings per shareNI ÷ Shares

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