What is the face value? In terms of face value shares, it is very important to know and understand what the face value is, what is its relation with the valuation
What is the face value? In terms of face value shares, it is very important to know and understand what the face value is, what is its relation with the valuation of the stock or the market price. Here, we will also understand how the stock splits, what is its effect on the face value of the stock and the impact of its share on the stock split can have its effect on market prices.
Face Value is the actual value of the face value share, which is marked on the stock proofs. If the total share capital of the company is 2 crore rupees and it issues twenty lakh shares of 10 rupees per share, then the face value of the shares of ten shares of ABC will be the face value of the company. Face Value is also called cross value or cross only.
Now if the stock market is increased to Rs 15 after the demand of the ABC company shares is increased in the market, then now it will call the premium value or above cross. And if the market price of the stock decreases to eight rupees then it will be called discount value or billow cross. If the price of the stock of ten rupees is only 10 rupees in the market then it will be called at par.
What is IPO
Often buyers do not check the face value of shares when purchasing shares. Please note that if a stock of a company is selling a face value of rupees twenty rupees and the company's value of 10 rupee face value of the B Company is being sold in twenty rupees, what would it mean? This means that A company's share is being sold at its face value of twenty times and the B company's shares are being sold at two times the price of their face value. I.e. A company's shares are being sold at higher premium than B Company.
The company can also change the face value of its stock. Companies can split their shares into split split and change their face value. Imagine if you have 100 shares of face value of Abus Company, and their market value is fifty rupees per share. The company splits its shares to their face value of Rs 5 per share. In such a situation, the company will convert the hundred shares of your ten rupees face value into two hundred shares of face value of five rupees. Now the market value of your stock is reduced and it is likely to be around twenty five rupees per share.
After most split, the market value of the shares does not decrease, in the proportion, as the proportion of the value decreases. That is why it is likely that after the split in this example, the market price of the stock will be more than twenty five rupees. Often companies split their shares when their shares are high in the market, so that the price of their shares remains in the reach of small investors and they can invest in these stocks.
Like a stock market tips in commodity, future and option an individual can also receive a recommendation in currency market. According to his individual risk appetite because, in currency derivative an individual can trade with the minimum investment as compare to the equity, commodity and its derivative.
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