Forcing a particular face value on companies has several implications. For one, it increases the number of shares outstanding. A company with shares of Rs 10 would have 10 times more shares if the face value were to be reduced to Re 1.
Who determines the face value of money?
The face value, while arbitrary in appearance, is determined by the company so that they can get real numbers for growth and projected needs. For example, if the issuer needs to have a factory-built that has a cost of $2 million, it may price stocks at $1,000 and issue 2,000 of them to raise the needed funds.
Stock prices are largely determined by the forces of demand and supply. … The price discovery happens where demand and supply meet at a particular price level (equilibrium) i.e. both the buyer and seller agree to trade at a particular price point.
How is face value calculated?
Understanding book value:
This simply means the value of shares in the company’s books. It is calculated by dividing the company’s net worth or the difference between its assets and liabilities with the number of issued shares.
Accordingly, in 1:10 split, shares of Rs. 10 face value may be reduced to face value of Re. 1. In such case, you will have 10 times the initial number of share held.
What is stock split?
|ABC company||Before stock split||After 1:10 stock split|
|Face value of shares issued||Rs. 10||Re. 1|
Understanding Face Value
For example, if interest rates are higher than the bond’s coupon rate, then the bond is sold at a discount (below par). … While the face value of a bond provides for a guaranteed return, the face value of a stock is generally a poor indicator of actual worth.
The face value of a share of stock is known as its par value, which is the legal capital of each share of stock. A business must retain this legal capital in its business and may not pay it out as dividends to shareholders. Face value, or par value, has no relation to the market value of stock.
100 face value
|S.No.||Name||Face value Rs.|
|2.||Lak. Auto. Looms||100.00|
|4.||Raja Bahadur Int||100.00|
Yes you can issue shares at face value and there won’t be any issue.
Is dividend paid on face value?
The dividend is always declared by the company on the face value (FV) of a share irrespective of its market value. The rate of dividend is expressed as a percentage of the face value of a share per annum.
Why is IPO price more than face value?
When shares are offered at more than the Face Value, then it is said that the issue is at a premium. The premium is the amount charged over the Face Value. Conversely, if shares are offered at a price lower than Face Value, then the issue is at a discount.