Quantitative - Stock and Shares

Stock and Shares Description

Important Terms and Formulas

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

2. Stock:- The total capital is divided into small units called stock or shares. The person who subscribes in shares or stock is called a stock holder or share holder.

3. Dividend:- It is the annual profit distributed among share holders. Dividend is paid annually or is calculated as a percentage of the face value of the share.

4. Face Value:- The price at which shares are issued by a company. Also known as Nominal value or Par value, it is printed on the share- certificate.

5. Market Price or Value:- The rate at which the stock is sold or brought.
  • At par:- If market value of the stock is same as its face value.
  • At premium or above par:- If market value of the stock is more than its face value. If a Rs. 100 stock is quoted at premium of 16, then market value of the stock = Rs.(100+16) = Rs.116.
  • At discount or below par:- If market value of the stock is less than its face value. If a Rs. 100 stock is quoted at a discount of 7, then market value of the stock = Rs.(100-7) = 93.

6. Brokerage:-
It is the sum of money paid to a stock dealer on the sale and purchase of stocks. It is paid on the face value.
  • When stock is purchased, brokerage is added to the cost price.
  • When stock is sold, brokerage is subtracted from the selling price.

7.
The face value of a share always remains the same.

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

9. Dividend is always paid on the face value of a share.

10. Number of shares held by a person = ${\frac{Total\quad Investment}{Investment\quad in\quad 1\quad share } = \frac{Total\quad Income}{Income\quad from\quad 1\quad share} = \frac{Total\quad Face\quad value}{Face\quad of\quad 1\quad share}}$
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