Tuesday, 26 July 2016

Terminology
1. Share - > A Share is the smallest unit of the divided capital.
Suppose, I and my friends planning to start a industry that produces the finished goods (Like Apparel, Cement, Vehicles, etc) and to establish the company we need 2,00,00,000 rupee and we don't have that sufficient amount or we don't want investing from our pockets to protect ourselves in case of bankrupt. So company go public by dividing the capital by 1,00,00,000 to give the smallest unit ie 2 rupee. This is called share and 2 rupee is called face value.
Now you can invest your 1000 rupee to buy my 500 shares (500*2 =1000) and you can be shareholder or co-owner my company.
2. Stock - > Stock is a collection of shares. When shares are converted into one fund then it is called stock.
Again you invested 1000 rupee in my company and you have 500 share and my company face value raises to 5 rupee and you can sell your shares in the market (500*5 = 2500) with profit 1500 and this 2500 hundred is called stock.
Simply, Subset and Set relation.



No comments:

Post a Comment