Stocks & Shares

Introduction

Stock-capital:- The total amount of money needed to run the company is called the stock-capital.  

Shares or Stock:- The whole capital is divided into small units, called shares or stock.

For each investment, the company issues a share certificate, showing the value of each share and the number of shares held by a person.

The person who subscribes in shares or stock is called a shareholder or stockholder.

Dividend and Face Value and Market Value

Dividend:- The annual profit distributed among shareholders is called dividend.

The dividend is paid annually as per share or as a percentage.

Face Value:- The value of a share or stock printed on the share-certificate is called its Face Value or Nominal Value or Par Value.

Market Value:- The stocks of different companies are sold and bought in the open market through brokers at stock-exchanges. A share (or stock) is said to be

(1) At premium or Above par, if it's market value is more than its face value.

(2) At par, if it's market value is the same as its face value.

(3) At discount ar Below par, if it's market value is less than its face value.

Thus, if an Rs, 100 stock is quoted at a premium of 16, then the market value of the stock = Rs. (100+16) = Rs. 116.

Likewise, if an Rs. 100 stock is quoted at a discount of 7, then the market value of the stock = Rs. (100 - 7) = Rs. 93

Brokerage And Remember

Brokerage:- The broker's charge is called brokerage.

1. When the stock is purchased, the brokerage is added to the cost price.

2. When the stock is sold, the brokerage is subtracted from the selling price.

Remember Points:- 

1. The face value of a share always remains the same.

2. The market value of a share changes from time to time.

3. The dividend is always paid on the face value of a share.

4. Number of shares held by a person = \(\frac{\text { Total Investment }}{\text { lnvestment in } 1 \text { shsre }}\) 

                                                                          (or)

                                                                   \(\frac{\text { Total lncome }}{\text { Income from } 1 \text { share }}\)

                                                                           (or)

                                                                    \(\frac{\text { Total Face Value }}{\text { Face value of } 1 \text { share }}\)