29 CHAP - 29 STOCKS AND SHARES To start a big business or...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
29. STOCKS AND SHARES To start a big business or an industry, a large amount of money is needed. It is beyond the capacity of one or two persons to arrange such a huge amount. However, some persons associate together to form a company. They, then, draft a proposal, issue a prospectus(in the name of company), explaining the plan of the project and invite the public to invest money in this project. They, thus, pool up the funds from the public, by assigning them shares of the company. IMPORTANT FACTS AND FORMULAE 1. Stock-capital: The total amount needed to run the company is called the stock- capital 2. 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 subscribers in shares or stock is called a share holder or stock holder. 3. Dividend: The annual profit distributed among share holders is called dividend. Dividend is paid annually as per share or as a percentage. 4. 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. 5. 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: (i) At premium or Above par , if its market value is more than its face value. (ii)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/13/2011 for the course FSD 011 taught by Professor Vinh during the Spring '11 term at Beacon FL.

Page1 / 4

29 CHAP - 29 STOCKS AND SHARES To start a big business or...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online