Describe how shares of a company are valued
Answer (1)
24th Nov, 2020
Hello aspirant,
The prices in the stock market is mainly determined by supply and demand. Like when a stick is sold, money is exchanged between the seller and the buyer. This amount is the Market Price. Next, when another stock is being sold, that amount becomes the new Market price now.
The company's shares are predicted by Dividend Discount Modules (DDM) where it is the cost of the present stock is equal to the sum of total of all its future payments.
A company's capitalisation = Share Price x Number of Shares Outstanding.
Hope this is helpful!
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