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Portfolio Representations by Jem Tugwell

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CHAPTER 2. Equity

2.1 Shares

2.1.1 Introduction

The stock, or ownership, of a business (company or corporation) is divided into shares. Stock typically takes the form of shares of either common stock or preferred stock. As a unit of ownership, common stock typically carries voting rights that can be exercised in corporate decisions.

2.1.2 Pricing

At any given moment, an equity’s price is strictly a result of supply and demand for the shares. The supply is the number of shares offered for sale at any one moment. The demand is the number of shares investors wish to buy at exactly that same time. The price of the stock moves in order to achieve and maintain equilibrium. More demand than supply will drive a price up, more supply than demand ...

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