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    Shares and Dividend

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    maddy_13863
    Shares represent equal parts of a company's capital and are offered to raise funds. Shareholders invest in shares and receive dividends from company profits. Shares have a face value and fluctuating market value. Dividends are a percentage of the face value and represent the shareholder's return. Companies may also issue bonds called debentures to raise funds. Stockbrokers charge commission when buying or selling shares on behalf of investors. Various formulas are used to calculate investment amounts, income, returns, and dividends based on share attributes.

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    Shares and Dividend

    Uploaded by

    maddy_13863
    48 views2 pages
    Shares represent equal parts of a company's capital and are offered to raise funds. Shareholders invest in shares and receive dividends from company profits. Shares have a face value and fluctuating market value. Dividends are a percentage of the face value and represent the shareholder's return. Companies may also issue bonds called debentures to raise funds. Stockbrokers charge commission when buying or selling shares on behalf of investors. Various formulas are used to calculate investment amounts, income, returns, and dividends based on share attributes.

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    Shares represent equal parts of a company's capital and are offered to raise funds. Shareholders invest in shares and receive dividends from company profits. Shares have a face value and fluctuating market value. Dividends are a percentage of the face value and represent the shareholder's return. Companies may also issue bonds called debentures to raise funds. Stockbrokers charge commission when buying or selling shares on behalf of investors. Various formulas are used to calculate investment amounts, income, returns, and dividends based on share attributes.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    48 views2 pages

    Shares and Dividend

    Uploaded by

    maddy_13863
    Shares represent equal parts of a company's capital and are offered to raise funds. Shareholders invest in shares and receive dividends from company profits. Shares have a face value and fluctuating market value. Dividends are a percentage of the face value and represent the shareholder's return. Companies may also issue bonds called debentures to raise funds. Stockbrokers charge commission when buying or selling shares on behalf of investors. Various formulas are used to calculate investment amounts, income, returns, and dividends based on share attributes.

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    Shares and Dividend – Summery Notes

     Shares: In order to run a business several persons join together to form a joint stock company.
    The total money invested by the company is called its capital stock. The capital stock is
    divided into a number of equal small parts. Each such part is called a share.
     Shareholder: A person who purchases one or more shares is called a shareholder.
    There are generally two types of shares:
    (i) Preference shares (ii) Equity shares
     Face Value: The original value of a share stated in a certificate is called its face value (FV).
    The face value of a share is also called the register value, printed value or nominal value (NV).
     Market Value: The price at which a share can be bought or sold in the market is called its
    market value (MV). The market value of a share changes from time to time.
     If the market value of a share is the same as its nominal value, the share is said to be at par.
     If the market value of a share is more than its nominal value, the share is said to be above par
    or at a premium. For example, if a share of Rs. 100 is selling at Rs. 135, it is said to be selling
    at a premium of Rs. 35 or at Rs. 35 above par.
     If the market value of a share is less than its nominal value, she share is said to be below par
    or at a discount. For example, if a share of Rs. 100 is selling at Rs. 88, its is said to be selling
    at a discount of Rs. 12 or at Rs. 12 below par.
     Dividend: A company finalizes its account at the end of 12 months period. At that time its
    declares the profit made by it during the preceding year which is to be divided among the
    shareholders. The profit which a shareholder gets for his investment from the company, is
    known as dividend.
     The dividend is always expressed as a percentage of the nominal value of the share.
     The dividend is always calculated on the nominal value of the share whatever the market value
    of the share may be.
     Debentures: When a company needs money for its expansion or diversification, it issues
    bonds, called debentures.
     Brokerage or Commission: Stockbrokers, who bought and sold shares through agents,
    charge a certain amount, or in percentage for their services from the buyer as well as the seller.
    This amount is called brokerage or commission. Brokerage is calculated on the market value
    of the share.
     Some Important Formulae:
     Sum invested = Number of shares  MV of 1 share
     Income per share = Dividend %  Nominal value of 1 share
     Annual income = Income per share  Number of shares
    Totalinvestment
     Number of shares  , when shares are purchased from the market.
    Market value of 1share
    Total nominal value
     , when shares are allotted by the company.
    Nominal value of 1share
    Totalincome

    Nominal per share
     Dividend 
     Rate of return   100  %
     Investment 
    Dividend %  No.of shares  NV
     Annual dividend 
    100
     “15% of Rs. 100 shares at Rs. 145” means the:
     Face value of one share is Rs. 100.
     Market value of one share is Rs. 145.
     Dividend (i.e., profit) on one share is 15% is Rs. 100, i.e., Rs. 15 p.a.
     Income on Rs. 145 is Rs. 15 for one year.
     15 
     Rate of return p.a. is  100  % .
     145 
     “12% of Rs. 25 shares at a discount of Rs. 5” means the:
     Face value of one share is Rs. 25.
     Market value of one share is Rs. (25 – 5) = Rs. 20.
     Dividend on one share is 12% of Rs. 25 = Rs. 3 p.a.
     Income on Rs. 20 is Rs. 3.
     3 
     Rate of return p.a. is  100  %  15% .
     20 

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