A share is a unit of ownership in a company. Buy one share of a corporation and you own a small piece of it. Buy a thousand and you own more. Shares are bought and sold on stock exchanges. Their prices move constantly during trading hours.

Shareholders have rights. They vote on major decisions, receive dividends if the company pays them, and can sell their shares at any time. They also bear risk. If the company fails, shares can become worthless. Shareholders are last in line to be paid, after creditors.

Companies issue shares to raise capital. The first sale is the initial public offering. After that, shares trade between investors. The company does not get the money from those later trades. It only benefits indirectly through a higher share price, which can be used for acquisitions or executive compensation.

Key terms

• Common shares
• Preferred shares
• Dividends
• Voting rights
• Market capitalization