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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