Share Prices and Market Capitalisation

Flashcards covering the definition of share prices, issue price, share premium, factors determining share prices, differences between private and public company share prices, and market capitalisation, based on the provided lecture notes.

What is a share price?

A share price is the price paid to acquire ownership of a share.

What is the 'issue price' of a share?

It is the price at which shares are first issued.

What results when shares are issued for more than their issue price?

A share premium being established.

How is a share price determined once shares have been issued and are being traded?

By the interaction of demand (buyers) and supply (sellers).

What happens to the share price if demand for a share is greater than its supply?

The share price should rise.

What does a falling share price indicate?

Excess supply, meaning more sellers than buyers.

How is the share price of a private company initially set?

When shareholders 'subscribe' for their shares.

Why is it often hard to judge the current value of shares in a private company?

Because there is no active market in their shares.

What is a key characteristic of a public company's share price regarding transparency?

It is highly transparent, displayed publicly and in real-time, with all trades disclosed.

What does market capitalisation represent?

The total market value of the issued share capital of the company.