About A Stock Share Price

By: Anne Durrell

A Shares Prices for your stock is literally the amount that you pay for that piece of stock. Once that stock has been paid for you are literally part owner of that particular company. The price or value of that stock is figured out using a mathematical formula whereby the markets capitalization is divided by the amount of outstanding shares.

If you look at the Shares Prices over a fairly long period of time you can get and idea of and a feel for the profit potential for that particular stock and thus get an idea of the dividends that might be paid out. You will notice some differences here especially if you are dealing with a relatively new company but by and large you will find this method to be a good indicator of performance and potential.

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There are certain rules and regulations that come into play when talking about the Shares Prices on a piece of stock. For instance, in the United States, in order for e piece of stock to be on the NASDAQ it has to be priced at one dollar or more. In the event that the price of the share falls below that level it becomes what is know as "delisted" and is then reverted to the state of an Over The Counter stock or OTC as they are known in the trading industry. In order for it to remain on the NASDAQ list, it must remain above the one-dollar price point for at least ten straight days of open trading.

There are many companies out there that prefer to keep the Shares Prices lower. This can be advantageous when talking round lot trading, which is in multiples of 100. In this way a company or corporation can adjust it's cost per share by generating a stock split wherein the total number of shares in doubles and the total price per share is cut in half so the dollar value remains the same.

The Shares Prices has a lot to do with the movement of the number of shares purchased. This is true in newer companies because investors are more likely to take a chance on a little known stock or company if the investment and risk factor is low. A great example of this can be found by researching the price of a share of stock in Microsoft when it went public against what it trades for today.

At the onset relatively no one wanted to take a gamble on the young Bill Gates and his motley looking crew of techno wizards. Yet those people that did so managed to amass quite a chunk of profit as Microsoft rather quickly took over the world of computers and shaped the computer Industry, as we know it today.

You may want to check out my other guide on stock trading companies and stock market chart

Shares Prices

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About A Stock Share Price

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