In order to enter into the stock investments, as an investor you need to know some fundamentals about the stocks. Some of the basic fundamentals about the stocks are discussed below:
Face value of a stock:
The nominal or stated amount (in $) assigned to a security by the issuer. For shares, it is the original cost of the stock shown on the certificate; the face value is usually a very small amount ($ 5, $ 10) and does not have much bearing on the price of the share, which may quote higher in the market, at $ 100 or $ 1000 or any other price.
Equity Capital
Total equity capital of a company is obtained by multiplying the total number of shares with its face value. For example, in a company the total no of equity shares are 20, 00,000 units of $ 10 each. Then the equity capital of the company is $ 2, 00, 00,000.
Issue price:
The price at which a company's shares are offered initially in the primary market is called as the Issue price. When they begin to be traded, the market price may be above or below the issue price.
Market Capitalization:
The market value of a quoted company, which is calculated by multiplying its current share price (market price) by the number of shares in issue, is called as market capitalization. E.g. Company A has 120 million shares in issue. The current market price is $ 100. The market capitalization of company A is $ 12000 million.
Thus some basic knowledge about stocks is mandatory for the investors to invest in the stocks.
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