What are shares? A share represents a unit of ownership in a company. When a company needs to raise money, it divides its capital into small units called shares. People who buy these shares become shareholders (partial owners) of the company.
Key terms related to shares:
| Term | Meaning |
|---|---|
| Face Value (FV) | The original value of a share printed on the certificate. Also called Nominal Value or Par Value. Typically ₹10, ₹25, ₹100 etc. |
| Market Value (MV) | The price at which a share is traded in the stock market. Can be higher (premium) or lower (discount) than face value. |
| Share Capital | Total value of all shares issued by a company. |
| Initial Public Offering (IPO) | The first time a company sells its shares to the public. |
Types of shares based on market value:
- At par: MV = FV (selling at face value)
- At premium: MV > FV (selling above face value)
- At discount: MV < FV (selling below face value)
Real-life analogy: Think of a pizza that costs ₹100 (face value). If people really want the pizza, they might pay ₹120 for it (premium). If no one wants it, they might pay only ₹80 (discount). Whether you pay ₹80, ₹100, or ₹120, the pizza is still the same pizza — just like a share represents the same ownership regardless of what you paid for it!