Dabbling in the stocks and shares can be a risky but lucrative past time for those brave enough to attempt a ride on the London stocks rollercoaster.
The London Stock Exchange can trace its history back 300 years to 17th Century coffee houses in London and since then has grown to the most international of stock exchanges with 3000 companies from 70 countries admitted to trading there. It is the fifth most valuable stock exchange in the world.
If you're a beginner, here is a basic description of the main stocks & shares terms you might hear:
SHARES
- SHARE - a stake in a company's assets. Depending on the number of shares the shareholder has they can have a lot of influence via voting rights on corporate business in the AGM
- ASSETS - include cash in hand, property, raw materials and work in hand.
STOCKS
- COMMON STOCK - is a unit of ownership which can carry corporate voting rights.
- PREFERRED STOCK - a unit of ownership which does not carry voting rights but the owner is legally entitled to receive a certain level of dividend payment.
- STOCKS AND OPTIONS - contract between buyer and seller that gives the buyer the right to buy a particular asset at a later date at an agreed share price. In return, the seller collects a premium. There is however no obligation to buy.
- PENNY STOCKS - a penny stock is a unit of ownership with a market price of below 1 unit of the local currency. Can rise steeply and drop steeply so keep a close eye on them.
- DIVIDEND - is a proportion of profits paid to shareholders and is paid out either annually or bi-annually.