Benefit For Companies

Access to capital.

• Access to cheaper funds than would have been raised from financial institutions.

• Opportunities abound where capital can be invested to yield returns.

• Listing on the exchange boost the image of the company.

• Visibility of the company and its products.

Benefits for Individuals

WEALTH CREATION- Investors in the capital market receive returns in any of, or a combination of the following:
i) Dividend/ Interest A dividend is a share of the profits of a company for a financial year in proportion to the number of shares held. Every shareholder has a right to receive dividends if declared and at the annual general meeting (AGM) of the company. Interest is also paid to bond holders periodically as stated in the agreement.

ii) Capital Appreciation Capital appreciation refers to an increase in the price of a stock over a period of time. Capital appreciation gives an investor the opportunity to sell the stock he has bought for a profit at a later date. For instance, if an investor buys 1000 units of ABC Plc stock at ₦5 each and the price rises to ₦6, the investor has made a ₦1 gain on each stock which equates to 20% return on investment.

iii) Bonus A bonus or bonus issue refers to the issue of new shares to existing shareholders in the proportion of their current shareholding at no charge to the shareholders; the shares are paid for from the reserves of the company. For example if a company declares a bonus of 1 for 3, it means each shareholder will be entitled to 1unit of share for every 3 held. The market price of the shares of a company that issued bonus shares is always adjusted downwards in order to reflect the increase in the number of shares of the company
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