What Is A Share

This lesson covers shares, including their definition, shares outstanding, comparing terminology for whole businesses and one share, basic valuation techniques for one share, and the importance of stock investing. The lesson uses the example of Nancy and her ice-cream stand to demonstrate how a company can be broken down into shares, with shares outstanding representing the number of pieces a company has been divided into. Owning one share means owning a proportional fraction of the company. The lesson covers valuation techniques, including the price to earnings ratio (PE) and its importance in comparing a stock’s market price to its earnings per share (EPS). The lesson stresses the importance of understanding the value of a whole business in order to properly value one share. A practical exercise is provided to apply the terminology learned in the lesson.