Equity share

An equity share is a right to part-ownership of a publicly-listed company. It is also known as common stock.

How is the value of an equity share determined?

The monetary value of the ownership or value of a share is determined by the company’s market value, as that gets divided by the total number of shares to give us the worth of a single share of stock.

What are the types of equity shares?

1. Subscribed shares
2. Authorized shares
3. Paid-up shares
4. Sweat equity shares
5. Bonus shares
6. Rights shares
7. Preference shares

What is equity share with differential rights?

It implies issuing shares with different rights as to voting rights, dividend received, etc. it is generally done in case the company doesn’t want to hamper the quality of the decision-making process. There can be equity shares with higher voting rights or inferior voting rights and high dividends.

Benefits of Investing in Equity Shares

High risk, high reward

Equity shares generally come with high-risk factors but generate high returns as well. When a company earns profit, an investor can gain more when the company pays dividends to shareholders.

Easy investing

An investor can easily make an investment in equity shares with the help of stock broker or financial planner. Using a Demat account, investors can purchase shares of any firm they choose. Trading can be done easily and effectively using a Demat account.

Diversification

By investing in a company’s shares from multiple sectors or industries, investors can build a broad investment portfolio. Thus, diversification helps in building a stable portfolio with predictable returns.