Face Value and Market Value The face value of a share is the initial price paid to acquire it. It represents the initial investment you make in the compa...
The face value of a share is the initial price paid to acquire it. It represents the initial investment you make in the company.
Market value refers to the current price at which a share is bought and sold in the stock market. It fluctuates based on supply and demand, with buyers paying more than sellers for shares they are willing to buy.
Key difference:
Face value: A fixed amount paid initially, regardless of the current market price.
Market value: The actual price paid or received when buying or selling a share.
Example:
Imagine you buy 10 shares of a company for 100.
A few months later, the stock's price increases to 12 per share, which means you bought the shares at a lower price and sold them at a higher price.
Additional points:
The face value is typically lower than the market value due to discounts offered by the company.
Market value can be influenced by various factors like company performance, industry trends, and investor sentiment.
Understanding these concepts is crucial for evaluating investment opportunities and understanding the dynamics of the stock market