shares/shareholders

• What is an incorporated business commonly referred to as?

  A company
• What defines a company as a separate legal entity?

  It has its own legal identity
• Who are the owners of a company?

  Shareholders
• What are the two types of limited companies?

  • Private Limited Companies
  • Public Limited Companies
• What is a characteristic of Private Limited Companies?

  Shares cannot be traded publicly
• How many shareholders do Private Limited Companies usually have?

  One or a few shareholders
• What is a key advantage of setting up a Private Limited Company?

  It is quick and cheap to set up
• What is the minimum share capital required for a Public Limited Company?

  £50,000
• What is a requirement for Public Limited Companies regarding shares?

  Shares may be traded on a public stock market
• What is a disadvantage of Public Limited Companies?

  They are costly to administer
• What are dividends?

  Payments made to shareholders from profits
• How is the amount of dividends paid determined?

  It is “per share” held
• Is there a requirement for companies to pay dividends?

  No requirement, but most do
• What is capital growth?

  Increase in the value of the business
• When is capital growth realized?

  When a share is sold
• What is a share?

  An individual part of issued share capital
• What type of shares are most common?

  Ordinary shares
• What rights do ordinary shares provide?

  Equal voting rights based on shares held
• How is shareholding percentage calculated?

  Shares held compared to total shares issued
• What qualifies a shareholder for dividends?

  Holding shares when dividends are paid
• What determines a share price?

  Interaction of supply and demand
• What happens if demand for a share exceeds supply?

  The share price should rise
• What does a falling share price indicate?

  Excess supply of shares
• How is the share price of a private company initially set?

  When shareholders subscribe for their shares
• How is the share price of a private company determined thereafter?

  When shares are bought or sold
• What is a challenge in determining the current value of a private company's shares?

  No active market for shares exists
• How is the share price of a public company characterized?

  Highly transparent and publicly displayed
• What information is disclosed for trades of public company shares?

  How many shares bought/sold and at what price
• What does market capitalisation represent?

  Total market value of issued share capital
• How is market capitalisation calculated?

  Share price per share times number of shares
• What factors within a company's control influence its share price?

  Financial performance and dividend policy
• What external factors can influence a PLC’s share price?

  State of the economy and market sentiment
• What is a profits warning?

  Bad news affecting market expectations
• How does a profits warning affect share price?

  It usually results in a significant fall
• What is share capital also known as?

  Equity finance
• What returns do shareholders receive from share capital?

  Dividends and capital growth
• What is a characteristic of share capital?

  It is part of the ownership of a company
• What is debt commonly in the form of?

  Loans or overdrafts
• What return do lenders receive from debt?

  Interest on the amount loaned
• How is debt typically repaid?

  Over an agreed period