Basic questions and answers on stock market

What is a share?
A share is nothing but a part of the ownership of the company. Of all capital invested at the beginning or in case of expansion, the amount invested in the company will be divided into parts and allocated to the public in the form shares. If you have a number of shares in the company then you have more ownership stake.

What is a share price?
Each and every share is having a different share price and the price which is the saleable stock of the company in an exchange on a particular time and date. Generally, share prices fluctuate.

What is the Face Value of a share?
It is the nominal value of the share at the timing of issuing by the company to the public or original cost of the stock shown on the certificate. Simply to say “par value”.
The face value of the share will be ₹ 1, ₹ 2, ₹ 5 and ₹ 10 in India.

What is the Book Value of a share?
The value of the share will be decided by the company based on the net worth of the company. Simply, amount getting by the shareholder after selling assets and paying off liabilities per share.

What is the Market Value of a share?
The price which is quoted in an exchange to trade is called market value. It can change the time to time-based on the transaction, events happening around the globe and show the worth of the company. Nothing but share price.

What are the types of shares in the market?

Generally, it says a main source of finance to the company because it issues to the general public and the subscription made of public money and payable whenever the company made earnings and they do not have any particularity on payment like interest on debt, dividend, etc., but these shareholders having voting rights as the stake held by them. These are also called ordinary shares.


  • Entitled to receive the high dividend if there are more returns.
  • The gains are depending on the market rise as return on investment.
  • Limited liability from the side of the shareholder up to investment made.
  • Ownership rights on a company.
  • Eligible to get right shares.
  • Eligible to take bonus shares.
  • Ownership rights are easy to transfer.
  • Can claim some amount of liquidation.
  • Getting more number of shares while stock split.


  • Receives dividend in case after the distribution of priority holders. No profits – no dividend.
  • Highly risk share compared with debt.
  • Markets are highly volatile.
  • Control varies depends on the investment made such as low investment – low control – low voting rights.

These shares are the issue to the preferential shareholders who view is to get continuous returns from the company. The returns ratio is comparatively very low from ordinary shares and preference shares will get returns even the company is in losses, and do not have any kind of voting rights.


  • The amount invested is in safe hands and returns are regular.
  • Even if the dividend is not paid this year, subsequently can be paid by the company.
  • No dilution of control
  • Return percentage will be predetermined.
  • Do not create any charge on company assets.
  • Can be redeemable.


  • No huge profits on huge gains.
  • A company cannot offer high-interest rate to the holders.
  • No voting rights.
  • A company may refund the money to investors when the market is favorable to the company.

If the company is not paid any dividend belong to the shares i.e., dues in past, the company will be paid on later. There are no losses incurred to the holder.

The dividend is payable out of the net profits only when profits occurred and the arrears cannot be claimed in subsequent years.

Companies issue this kind of shares on the condition that company will repay the amount of
invested after a specific period say expiry date or even at the discretion of the company.

These shares do not carry the rights to receive any kind of arrears of dividend. If the company failed to make payment in any particular year then need not to pay out of future profits.
Bearer shares,

An equity security wholly owned by whoever holds the physical stock certificate. The issuing firm neither registers the owner of the stock nor tracks transfers of ownership and disperses dividends to bearer shares when a physical coupon is presented to the firm.

The shareholder voting rights are eligible for the participation of general meeting as a part of decision making, vote casting. The rights are eligible for equity shareholders and the non- voting rights are held by preference shareholder.

The shares which are convertible into equity share capital after a specified time irrespective of the share price. The company allots the shares to the public as per agreement with whom made.

The stock which is traded at low price having low capitalization and illiquid. The share price in the Indian markets is below ₹ 10. These are more speculative and highly volatile with limited disclosures.

The classification of the share or common stock that is accompanied by the more voting rights. Class A shares are having more voting rights than class B. The details are included in the description of the company bylaws and charter.

The ‘’blue chip’’ is the word derived from the poker game because the blue chips are more valuable.
These stocks are more consisted and belong to reputed companies who are in the market for a very long time, financially strong, good past performance and track record. In other words, these companies are considered as leaders in the market due to sound financial record.
The fluctuations are comparatively low and deep fall and a deep steep rise is not possible majorly and considered as less risky. Blue chip companies are good to give a more consistent dividend, stability, good financial ability etc.

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