How share prices are determined in the share market
The increases and decreases of the share price are caused by the activities of the shareholders and the company.
It will be easier for you to understand the share market if you have a clear understanding of these four points
✬ The price of shares in the share market is determined by the selling price
✬ The selling price of shares in the share market can be determined by the company or shareholders
Similarly, you can place a request to buy shares at any price.
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The price of a share in the share market varies depending on which share is being excess sold at what price and which share is being excess bought at what price.. (priority )
The share price of a company can be divided into two stages
✏
Face value 
✏ Selling price
Initial Public Offering (IPO) Face value
You clearly understand that the Face value of a company cannot be determined by the company
- ⛚ The Face value is determined by the share authority of the country. The Face value of this will depend on the net assets of the company.
- ⛚ If the company sells more than the Face value it is called a primuim and if it sells less it is called a discount
You need to understand clearly
The company is Face value is $10 but the selling price $14 .Suppose all the shares are sold for $14 . incase if the company is dissolved you will only get back $10
The sale of company shares will take place in three stages
- Application received ↓
- Allotment ↑
- Call money ↔
But the sale of shareholders ’shares will take place immediately
The share price is determined by the company
example
- ⌛ 01/01/24: Chair manufacturing company issue the shares 100 at $10 each
- ⌛ 01/02/24: Chair manufacturing company received 200 application
- ⌛ 01/03/24: Did not sell company shares 100 at $10 each , The company raised the price of the shares to $ 14 (primium $4)
- ⌛ 01/04/24: Chair manufacturing company received 80 application
- ⌛ 01/05/24: when the Chair manufacturing company sells only 80 shares (80 *14)
- ⌛ 01/05/24: The Chair manufacturing company reissue the remaining 20 shares after 10 days for $12
There is no loss to the company due to the rise and fall of such shares, This is profitable for the company
Capital profit of chair manufacturing company $320 (80*4) + $40 (20*2) = $360
The company is again issuing new shares
- Face value 10
- Selling price 16
Now the price of the shares already issued by the company will rise to $16
OR
The company is again issuing new shares
- Face value 10
- Selling price 11
Now the price of the shares already issued by the company will decrease to $11
The share price is determined by the Share holders
The ups and downs caused by the shares holders will happen minute by minute
Example
08/19/24 20 shareholders of the Chair manufacturing company are selling shares
- 5 shareholders sell the shares for $13
- 8 shareholders sell the shares for $12
- 3 shareholders sell the shares for $11
- 4 shareholders sell the shares for $10
- ⌛ Am 11 .00 : The share price of the Chair manufacturing company at the beginning of the share market is $12
- ⌛ Am 11. 30 : sales 2 shares for $11 | shares price decresss $1 of the share market
- ⌛ Am 01. 25: sales 3 shares for $10 | shares price decresss $1 of the share market
- ⌛ Am 01. 45: sales 1 shares for $10 | shares price increse $1 of the share market | share price $11
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