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Aptitude Stock and Share


  1. Stock Capital - The total amount of money 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 subscribes in share or stock is called a shares holder or stock holder.

  3. Dividend - The annual profit distributed among share holder 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 stock of different companies are sold and bought in the open market through broken at stock exchange. A share (or stock) is said to be:

    • At premiumor above par - If its market value is more than its face value.

    • At par - If its market value is the same as its face value.

    • At discount or below par - if its market value is less than its face value.

    Thus if an Rs 100 stock is quoted at a premium of 18, then market value of the stock =Rs (100+18) =Rs 118.

    Likewise if an Rs 100 stock is quoted at a discount of 8, then market value of the stock=Rs (100-8) =Rs 93.

  6. Brokerage - The broker charge is called brokerage.

    • When stock is purchased, brokerage is added to their cost price.

    • When stock is sold, brokerage is subtracted from the selling price.

Points to remember:

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

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

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

  4. Number of shares held by a person=total investment/investment in 1 shares = total incomes/ income from 1 share = total face value/face value of 1 share.

Thus, by an Rs 100, 9% stock at 120, we mean that:

  1. Face Value (N.V) of stock=Rs 100.

  2. Market value (M.V) of stock=Rs 120.

  3. Annual dividend on 1 share =9% of face value = 9% of Rs 100 = Rs 9.

  4. An investment of Rs 120 gives an annual income of Rs9

  5. Rate of interest p.a = Annual income from an investment of Rs. 100 = (
    9 / 120
    x 100)% = 7
    1 / 2
    %







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