confused

aqua2006 · #1 21st April 2006, 09:52 PM

dear friends,
i'm a newcomer to trading. recently i bought 100 shares of gujarat cements @ around rs 112. my demat account shows something like this;GUJARAT AMBUJA CEMENTS- EQ NEW FV RS. 2/ - 100.00 .
what do they mean by EQ NEW FV RS 2. SAME IS THE CASE WITH DABUR SHARES.
kindly guide regarding the fv thing and how it affects the shareholder.
regards,aqua.

Rao · #2 22nd April 2006, 12:57 AM

Dear aqua2006
"EQ NEW FV RS. 2/"
Means Equity shares of Face Value Rs. 2/-
Shares are of different face value such as Rs.10, Rs.2 etc.
Prior to splitting Guj Ambuja was of Rs. 10 face value but after it became of Rs.2/-.

ok.

aqua2006 · #3 22nd April 2006, 01:36 AM

Quote:

Originally Posted by Rao

Dear aqua2006
"EQ NEW FV RS. 2/"
Means Equity shares of Face Value Rs. 2/-
Shares are of different face value such as Rs.10, Rs.2 etc.
Prior to splitting Guj Ambuja was of Rs. 10 face value but after it became of Rs.2/-.

ok.

how does that affect the value of share? am i losing something? what is the significance of face value of a share?

AMITBE · #4 22nd April 2006, 11:28 AM

Quote:

Originally Posted by aqua2006

how does that affect the value of share? am i losing something? what is the significance of face value of a share?

aqua2006, the face value of a share is of course the original Rupee value of the share specified by the issuing company. It's the price of the stock shown on the certificate in the days of certificates.

The folowing is a link to a query on stock splits:
http://www.traderji.com/36306-post3160.html

You'll come across the term 'liquidity' in that post.
Simply, liquidity means how easy it is to buy and sell a share without infuencing a change in the current prevailing price.
If you buy a 100 stocks at RS. 50 and sold them immediately after, then the market for that particular stock is quite liquid.
So, liquidity is the ability of a share to be converted into cash quickly, meaning buy or sell, without much influencing the current price range.

But instead, if you were unable to sell the 100 stocks, or could sell only a few, the market for that stock is illiquid.
In a very liquid stock you could buy a thousand stocks without much raising the prevailing price.

Normally in a liquid stock, the bid/ask spread is quite minimal.
The bid-ask spread and traded volume of a stock are closely related and play an important role in the liquidity.
A buy/sell transaction can take place only when the buyers and sellers agree on price.
The bid is the highest price being offered for the stock at any given time by the buyers.
The ask is the lowest price at which the stock is being offered at by the sellers.
Because these two prices must meet in order for a transaction to take place, large bid-ask spreads imply a low volume for the stock, while a minimal bid-ask spread imply high volume.

Hope the link above, and this post help clear your doubts.
All the best.

srisara · #5 22nd April 2006, 12:08 PM

Aqua,

to make it simple for you. Face Value represents the actual value of a share certificate. you need not worry about it.

in simple terms your are buying a 2 rupees worth share for 112. This is quite common in industry, as we like to pay premium (say extra money) for the things we like. isn't it?

so, dont worry much abt FV at present (since u look new to investing or trading) . Its importance comes only when the dividends are paid.

ie. A company announces a dividend of 100% of its face value (say 2 rupees). meaning, they will give you 2 rupees dividend per share.

hope this clarifies.

Satya

pkjha30 · #6 22nd April 2006, 12:50 PM

Quote:

Originally Posted by aqua2006

dear friends,
i'm a newcomer to trading. recently i bought 100 shares of gujarat cements @ around rs 112. my demat account shows something like this;GUJARAT AMBUJA CEMENTS- EQ NEW FV RS. 2/ - 100.00 .
what do they mean by EQ NEW FV RS 2. SAME IS THE CASE WITH DABUR SHARES.
kindly guide regarding the fv thing and how it affects the shareholder.
regards,aqua.

Hi Aqua

FV=Authorised Share Capital/Total OutStanding Shares

So if Share Capital is 100 and outstanding shares are 10 then FV will be 10 for each share. As Srisara explained In India it is used for dividend calculation.

Book Value of share=Book Value of the Company/Total Outstanding shares

Market Value of Shares= The price a buyer is willing to pay to acquire one share of the Company.It reflects the cost o the belief of the buyer about the intrinsic value of the stock, future prospects of the stock, his expectations of rise in share prices,his emotional state at the time of purchase, and in equal measures same factor on the seller side balanced in springed tension.
Seller would like to stretch the spring and buyer would like to squeeze it.
If no pressure is applied it will return to its original value that is book value which need not be equal to either Market value or to Face value(could be less or more)

Quote:

[Sourced from http://www.investopedia.com/terms/b/bookvalue.asp]
It is the total value of the company's assets (depreciated)that shareholders would theoretically receive if a company were liquidated.

By being compared to the company's market value, the book value can indicate whether a stock is under- or overpriced.

aqua2006 · #7 22nd April 2006, 05:10 PM

Quote:

Originally Posted by AMITBE

aqua2006, the face value of a share is of course the original Rupee value of the share specified by the issuing company. It's the price of the stock shown on the certificate in the days of certificates.

The folowing is a link to a query on stock splits:
http://www.traderji.com/36306-post3160.html

You'll come across the term 'liquidity' in that post.
Simply, liquidity means how easy it is to buy and sell a share without infuencing a change in the current prevailing price.
If you buy a 100 stocks at RS. 50 and sold them immediately after, then the market for that particular stock is quite liquid.
So, liquidity is the ability of a share to be converted into cash quickly, meaning buy or sell, without much influencing the current price range.

But instead, if you were unable to sell the 100 stocks, or could sell only a few, the market for that stock is illiquid.
In a very liquid stock you could buy a thousand stocks without much raising the prevailing price.

Normally in a liquid stock, the bid/ask spread is quite minimal.
The bid-ask spread and traded volume of a stock are closely related and play an important role in the liquidity.
A buy/sell transaction can take place only when the buyers and sellers agree on price.
The bid is the highest price being offered for the stock at any given time by the buyers.
The ask is the lowest price at which the stock is being offered at by the sellers.
Because these two prices must meet in order for a transaction to take place, large bid-ask spreads imply a low volume for the stock, while a minimal bid-ask spread imply high volume.

Hope the link above, and this post help clear your doubts.
All the best.

hi again,
thanks a ton to u and all others in the forum.
the link u provided was informative. i am getting to know a bit of this game. but what i am concerned about is that in my particular case regarding g.ambuja cements have i gained or lost due to the split, or does it not affecr the outcome?
thanks in advance.

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