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nternal Shares There are two main types of shares: Ordinary shares and Preference shares. Ordinary shares are the largest single form of long-term capital used by businesses. The ordinary shareholder may receive a share of the profits in the form of a dividend. The dividend may vary, according to the amount of profit made by the business, and the amount kept back by the directors for reinvestment in the company, this is known as the retained profits. Preference shares also give the shareholder part-ownership in the company. However, the preference shareholder is paid a fixed dividend, and has priority over the ordinary shareholder when the profits are shared out. In a good year, therefore, the return in dividends to a preference shareholder may be less than that to a ordinary shareholder, as the risk taken is smaller.
Approximate Word count = 479
Approximate Pages = 1.9
(250 words per page double spaced)
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