WHAT ARE EQUITIES?
To hold equities – through either the purchase or transfer of shares – is to own part of a company.
In return for increased financial performance by the company, the investor will receive a return or profit: either in the form of dividends, usually paid at set periods dependent on company performance, or via an increase in the share price.
Equities offer the potential for significant returns if the company exceeds the market’s expectations, but the value of shares can fall. Therefore, investment in stocks and shares requires an acceptance of investment risk.
Investment can be made in publicly listed companies or private companies. A publicly listed company is listed on a stock exchange.
A public company's market value, or market cap, is determined by multiplying a company’s number of existing shares by the value of a share i.e., a company that trades at £15 per share and has 1 million shares has a market value of £15,000,000.