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Educational Disclaimer: This site is for education only. We do not give investment advice. Shares are volatile — prices go up and down and you may lose money. Always do your own research and speak to a professional adviser.

Stocks, the NGX, and the Lotus Index

What Is a Stock?

6 min read Includes quiz · 2 questions

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Educational Disclaimer

This lesson is for education only. We do not give investment advice. Shares are volatile — prices go up and down and you may lose money. Always do your own research and speak to a licensed professional adviser.

Stocks — ownership sliced up

Imagine Alhaji Musa owns a profitable rice milling business worth ₦10 million. He wants to expand but needs more capital. So he divides the business into 10 million equal pieces called shares. Each share is worth ₦1. He sells 4 million of them to the public, keeping 6 million himself.

If you buy 100,000 shares at ₦1 each, you spend ₦100,000 and own 1% of the entire business. You are now a shareholder.

💡 A stock (or equity) is a unit of ownership in a company. Each unit is called a share. Collectively, they represent the entire company.

How shareholders earn money

Dividends: When the company makes a profit, it may pay a portion to shareholders. If the company earns ₦5 per share and pays ₦2 as dividend, you receive ₦200,000 on your 100,000 shares.
Capital appreciation: If the business grows and becomes more valuable, the share price rises. Your 100,000 shares at ₦1 may now be worth ₦1.50 each — a ₦50,000 gain without selling.

How shareholders can lose

If the business struggles or fails, the share price falls. Your ₦100,000 investment could be worth ₦60,000.
In a worst case (company bankruptcy), shareholders are last in line — you may get nothing.

This is why research and screening matter — both for financial health and for halal compliance.

Knowledge Check

Quick Check: Stocks

2 questions · Retryable · Earn points

Question 1 / 2 +10 pts

If LASACO Assurance has 5 billion shares outstanding and you own 50 million shares, what percentage of the company do you own?

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Question 2 / 2 +15 pts

You buy 1,000 shares of a company at ₦45 each. The price rises to ₦52. What is your profit if you sell?

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