Lesson 6: What is a Share? | Basics of Stock Market Course

🧩 What is a Share?

(Module 2: Basics of Stocks)

A share is a unit of ownership in a company. When you buy a share, you become a part-owner of that business. It gives you the right to participate in profits, dividends, and decision-making through voting rights.

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📘 Understanding What a Share Is?

Every company divides its total capital into small units called shares.
Buying one share means you own a portion of that company’s ownership.

📊 Example:
If a company has 1,00,000 total shares and you buy 1,000, you own 1% of the company.

Owning shares makes you a shareholder, and you benefit when:

• The company earns profits (through dividends).
• The share price increases in the market.

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💡 Why Companies Issue Shares

Companies need funds for growth, expansion, and innovation.
Instead of borrowing from banks, they raise money through issuing shares to the public.

• The first time a company offers its shares = Initial Public Offering (IPO).
• After that, those shares trade between investors on stock exchanges like NSE or BSE.

This allows investors to buy, sell, and profit from share price movements.

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💰 Types of Shares

🟦 1. Equity Shares

• Represent real ownership in the company.
• Provide voting rights and dividend income.
• Returns depend on company performance and market conditions.
• High risk, but also high return potential.

📈 Example: Infosys or TCS shares rising due to strong results.

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🟩 2. Preference Shares

• Have fixed dividend payouts.
• Usually no voting rights.
• Preference shareholders are paid before equity holders in case of liquidation.
• Safer but limited profit potential.

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⚖️ Key Share Market Terms

Term	Meaning	Example
Face Value (FV)	The original nominal value of a share.	₹10
Market Value (MV)	The price at which the share trades in the market.	₹1,200
Dividend	Profit shared by the company with shareholders.	₹4 per ₹10 share
Book Value (BV)	Company’s net asset value per share.	Depends on balance sheet

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📈 How Share Prices Move

Share prices move due to:

• Company earnings
• Market sentiment
• Economic news
• Global trends
• Demand & supply among investors

A good company report can push the stock price up, while weak results may pull it down.

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🚀 Why Shares Matter for Investors

Owning shares helps investors:

• Build long-term wealth.
• Earn passive income through dividends.
• Beat inflation compared to fixed deposits.
• Participate in India’s economic growth journey.

📊 Example:
If Reliance share was ₹10 in the 1980s and is now above ₹2,500 — early investors multiplied wealth over decades!

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🧠 Quick Recap

• A share = unit of company ownership.
• Equity shares give ownership and voting rights.
• Preference shares give priority dividends.
• Face value ≠ market value.
• Long-term holding can generate massive wealth.

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🧩 Mini Quiz (Engage & Learn)

1️⃣ What does owning a share mean?
a) Lending money to the company
b) Owning part of the company ✅
c) Getting a fixed return

2️⃣ Which shareholders get dividends first?
a) Equity shareholders
b) Preference shareholders ✅
c) Directors

3️⃣ What is Face Value?
a) Market price
b) Original issue value ✅
c) Dividend rate

(💬 Share your answers in the comments below!)

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💬 Reader Engagement Section

👉 Do you own any shares yet?
💡 Want to learn how companies bring shares to the market?

Course Introduction

🌟 Coming Up in Lesson 7

👉 “Lesson 7 – How Shares Are Issued (IPO Process)“
In the next lesson, you will learn:

Learn how companies issue their shares to the public through the Initial Public Offering (IPO) process. Understand each step — from company approval and SEBI registration to share allotment and listing on stock exchanges — in this beginner-friendly lesson on how shares enter the stock market.

Open Demat Account

by Mirae Asset (m,Stock)