A share (share of stock) is a type of security that represents ownership in a company/ corporation divided into equal portions that are a claim on its earnings (dividends) and assets (residual interest). An entity issues shares as a means of fragmenting its ownership base into small units representing respective ownership stakes by the holders.
Shares can be classified according to several criteria, mainly including:
- In terms of certain rights attached to a stock: common share (residual interest, dividends, voting rights) and preferred share (guaranteed interest, no voting rights, no residual interest in the issuer’s assets).
- In terms of embedded features: plain vanilla shares and exotic shares (e.g., callable share).
- In terms of use and function: defensive stock, income stock, value stock, etc.
- In terms of trading venue: IPO stock, secondary market trading stock.
- In terms of relation to business cycle: cyclical stock, countercyclical stock, non-cyclical stock.
- In terms of issuer (size and market share): blue-chip stock, large-cap stock, small-cap stock, mid-cap stock, penny stock.
- In terms of place of issue: local or domestic shares, international shares.
- In terms of sector: energy shares, real estate shares, financial shares, utilities shares, etc.
- In terms of issuance round: authorized share, additional shares, bonus shares.
- In terms of voting rights: voting stock, non-voting stock.
- In terms of market price: par value stock, no-par value stock.
