Shares are securities representing a portion of the share capital of a company. Shares may be presented in two ways: physical (a certificate) or book-entry (record in securities accounts).

Shares allow companies to finance themselves by selling them or issuing new ones. When buying a share, the person becomes a shareholder of that company that issued the share in proportion to the shares held. Shares may be classified as follows: 

Regarding Ownership: 

Shares may be registered or bearer. 

(1) Shares may be registered: 

        a) Until they are fully paid; 

        b) When they cannot be transferred without the consent of the company; 

        c) When the partners enjoy the pre-emptive right in their transfer, under the terms set forth in the articles of association; 

        d) In the case of shares whose holder is obliged under the articles of association to carry out ancillary services to the company.

(2) Bearer share – share that is not registered in the name of its owner, and the respective ownership is determined by the physical possession of the share.

As for rights they confer:  

They may be ordinary or preferred. (both registered and bearer shares)

Ordinary shares are those that entitle their holders the full extent of their shareholder rights, including the right to vote in the resolutions of the general meetings and to elect the company's directors.

Preferred shares are those that give their holders priority dividends in each year.

As for stock market volatility: 

• Aggressive (or volatile) share – share whose value generally shows fluctuations larger than the market as a whole. Usually, usually these are shares with Beta Coefficients higher than 1.

• Defensive share – share whose value generally presents fluctuations lower than the market as a whole. Usually, usually these are shares with Beta coefficients lower than 1.

• High Flyer Share – excessively valued and very speculative, which shows abrupt increases in short periods of time.

Beta Coefficient Concept (or Beta Index)

• The Beta coefficient is a measure of volatility of a share (or basket of shares) in relation to market volatility and measures the so-called systematic risk, i.e. the degree of influence of the global market changes in the evolution of the share price or basket of shares. If, for example, the market index grows 5%, the share listing with a Beta coefficient of 0.5 will increase 2.5%.

• A share whose Beta coefficient is greater than 1 is said to be volatile; with a Beta coefficient less than 1, is said to be weak or defensive. Thus, in periods of crisis, with a more defensive attitude being preferable, it is necessary to opt for shares whose Beta is less than 1, that is, less volatile shares.

How to calculate the Beta Coefficient

The Beta Coefficient is calculated as the ratio between the Co-variance between the Asset and Market Return and Variance of the Market Return. In algebraic terms:

Where:

βa = Beta;

ra = Asset Return and;

rp = Portfolio Return (can also be used as rm = Return on Market)