A. What are Equities?
When you buy equities, also known as shares or stocks, you literally become a part-owner of that business. If, for example, ABC Plc has 100,000 shares worth £1 each and you buy £1,000 of shares, you own 1% of the company.
There are a number of different shares you can buy; including preference shares, ordinary shares, warrants etc. but the most popular type is the ordinary share. Ordinary shares simply represent ownership of a company.
Companies do not have to list on the stock market to issue shares. Many businesses start life with friends and family as shareholders. These businesses are called unlisted firms and their shares are often referred to as ‘unquoted’.
As a shareholder you have a say in the company’s affairs by voting at company meetings and, of course, the ability to share in its fortunes. If the company does well, the value of your investment should rise but if it does badly, you could see your shares fall in value.