Common Stock Value
Companies may issue
different stocks: common stock, preferred stock and so on. Common stocks are
best type of stock from the viewpoint of shareholders. A common stock may have
different values: face/per value, market value etc. Face/per value is simply
the amount of money in which it was issued by the firm and this value does not
change over time. On the other hand, market value is the value in which the
stock of that company is being traded in the stock market. The market value of
any common stock is determined by the demand of that stock in the market where
the performance and probable future dividends of that company determine
the demand of that common stock.
Importance of common stock value
Common stock value is one of the major
indicators of stakeholder’s demand and expectation over the company. In a
continuous better performing situation of an organization, the common stock value of that company
will certainly increase where just the opposite will happen if the performance
is not good enough to increase its demand.
Example: Suppose, Northern
Corporation (a fictitious company) 400000000 common stocks and that has value
of $12903 in year 2011 which was $8834 in the year 2010. So, the value of the
common stock of that company is in increasing order.
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