Shares represent the unit of investment in a company. Shares are also referred to as stocks or equities – all mean exactly the same.
Simply put, shares represent a divided-up stake in a company. Shares can be owned by ‘retail’ investors (like the general public) as well as institutional investors (such as pension and hedge funds).
Companies who ”float’ or ‘list’ on a stock exchange, allow investors to buy into their companies to raise capital or funds which can then be deployed into the company. The expectation is that these newly raised funds will enable the business to expand soundly and eventually increase their share price – benefiting both the business and its shareholders.
There are thousands of shares listed on the London Stock Exchange that UK investors can invest in. These range from smaller companies listed on the Alternative Investment Market to those companies listed on the FTSE 100 (biggest companies) such as BP and Barclays.