Some more Basics

Hi..
So , you have expanded your company to 200 crore. You have got 50 % of shares and Rest have got 50 %.

Now , 50 % accounts for 100 crore . That means if you have released a share at a price of 10 (FaceValue) , then you have released 10 crore shares. ( 10 crore * 10 = 100 crore ) Now the equation becomes like this...

You have got 10 crore shares and the public has got 10 crore shares . Total number of shares is 20 crore.

All the public that have bought your shares are called shareholders . Now many feel they does not want the share so they are ready to sell it whereas some wanted to buy the share. Now comes the share market. SHARE MARKET is nothing but a platform for buyers and sellers to exchange the shares and that is why it is called stock exchange.

If seller is ready to sell at 10.50 and buyer is ready to buy at 10.25 then share price is determined by last traded value. If there are more number of buyers then they will buy at 10.50 also and so on. So if more people are willing to buy your share your prices will move on .. because of simple demand supply ratio.

Now if you made a profit of 40 crore then all the public would be interested in buying even at Rs 12 because total worth 240 crore divided by 20 crore shares.

I think this is enough for lesson 2.