Here are 5 things to know about common shares, which will be especially useful to novice investors. There are two main types of actions : those ordinary and preferred shares. It is essential not to confuse the two classes, since they provide different advantages and separate evaluations.

1-With the ordinary shares, the investors can earn only two main circumstances : when the company pays dividends to their company or due to extra revenues. They represent the most common type of debt securities issued and traded on the stock market. To understand their value, it is necessary to determine the current range and that relating to future dividends. Suppose that a firm pays an annual dividend of 4 per share, and that the required rate of return is 13%. To find the present value of this joint action, you would divide 13 by 4, thus obtaining 30,77 Euro.


2-The ordinary shares are affected much of the volatility in the market. If a company is successful and growing rapidly, will have a greater demand for equity, increasing its monetary value. Some companies, however, may also choose to offer dividends or payments to shareholders , based on the gains it made ​​in the recent period.

3-Note: This type of action is one of the most risky investments , since regularly changing the price fixed by the reactions of the various investors and the success of the company in question. Remember that economic events are difficult to predict and control. It will be very useful to periodically check the stock charts on the websites of the web industry and the business press. In any case, evaluated very well the percentage of risk before performing any movement.

4-The preference shares are able to offer a more reliable source of income through their dividends, even if they have less chance of increasing in value. They are redeemed before the ordinary in case the company fails.

5-The voting rights are granted to shareholders on the basis of how many shares have. The ordinary shares guarantee a certain number or fraction thereof, depending on how the stock is split. This privilege helps the company to maintain the property when it wants to increase the share capital in equity, but not to spread the right to vote on a wider pool of investors.