Capital assets – The concept of capital assets. The main financial asset of the capital market is ACTION. Shares are usually defined as the relevant part of the share capital of the issuing company. Therefore, holding a stake in a company means holding it in a proportion equal to its share in relation to the total number of issued shares.
In the past, the shares issued had physical support, although the concept of ‘title value’ has now been changed to ‘right value or account value’ with the disappearance of physical support, which has been replaced by accounting entries through a computer record (accounting entry system) which facilitates transactions (issue, transfer, coupon payments, etc.) in an exceptional way. When a company is listed on the stock exchange, the buyer and seller determine the price of their shares through supply and demand.
Establishing this price assumes, in short, a valuation made by the market on the basis of the expectations of listed companies. For this reason, the Stock Exchange can be considered as a barometer of the economy.
CAPITAL ASSETS – RIGHTS GRANTED TO THE HOLDER
These are the main rights of the shareholder:
- The right to dividend payment (this is called the economic right of shares). The amount of dividend depends on the company’s results for each year, as well as on the profit distribution policy, therefore shares are treated as an equity product.
- Right of transfer. All shareholders have the right to transfer their shares. The Stock Exchange facilitates the exercise of this right because one of its main functions is to ensure the liquidity of shares.
- Pre-emptive right when an issuer increases its capital. This right may also be sold on the stock exchange.
- Political rights. All shareholders have the right to vote at the company’s general meeting. The only requirement is to have a minimum number of shares. Those with a smaller number may merge to reach the minimum and vote together.
PROFITABILITY OF STOCK MARKET OPERATIONS
The investor can earn a return on investment in shares through a variety of options:
- Dividend collection. This would be tantamount to collecting coupons on fixed income assets. Only that the amount of dividends is variable and not known beforehand.
- Capital gains. If the share price has risen from the moment of purchase to the moment of sale, the investor will have a profit for it (capital gain).
- Pre-emptive rights. For their sale in the form of a capital increase.