What is Face Value in Share Market? Definition and Its Importance


Thus we offer a complete solution to increase your efficiency in teaching by giving an interface to solve other managerial difficulties. If you don’t want to invest directly in stocks, mutual funds and index funds are other options. Investors of common stocks have a claim on the company’s assets and profit. As the company grows, the worth of your investment also increases. But there are also chances that you may lose your entire investment if things go wrong and the company loses value.

Book Value is calculated when the company’s net value, or the difference between its assets and liabilities, is divided by the number of issued shares. Is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters.

Each digit in these numbers has its place value as well as face value. Market value changes due to the prices of the equities purchased in stock exchanges. The corporation determines the pricing of share and bond face value.

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Find the place value and face value of all the what is face value with examples in 5873. It does not depend on the position or Place of the digit in a number. A Place value describes the position or Place of a digit in a given number.

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The group of thousands is formed by the second group of the following two digits to the left of the group of ones, which is further divided into thousands and ten thousand. The Vedic numbering system is the foundation of the Indian numeration system.For this one must divide the provided integers into groups or periods. Students must begin with the extreme right digit of the supplied number and work their way to the left. The primary distinction between place value and face value is that the place value deals with the digit’s location, whereas the face value indicates the real value of a digit. The number system is provided and is required for classifying digits into groupings of tens, hundreds, and thousands.

However, the face value of 5 in the same number 5689 is 5, the face value of 6 is 6, the face value of 8 is 8, and the face value of 9 is 9. The position of a digit in a number is represented by its place value. To determine the place value of the numbers in the number 4856, multiply each number by the digit value. With the use of an enlarged form of a number, the notion of face value and place value of a digit may be better understood.

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Face value is the value of the digit itself in a number, whereas the place value defines the value of the digit depending upon its position in a number. Learning about Mathematics is indispensable for every student. But CBSE NCERT textbooks are an important contribution in this regard in removing this fear and therefore, they have come up with these question papers. The student can refer to them which is available at the official website of Vedantu. This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes. I am studying here from 6th class and I am satisfied by its results in my life.

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The following factors portray the importance of Face Value in the share market. The place value of a number is defined as the position or the place of a digit in the number. The face value of any number can be represented as the value of the digit itself.

Clear can also help you in getting your business registered for Goods & Services Tax Law. CAs, experts and businesses can get GST ready with ClearTax GST software & certification course. ClearTax can also help you in getting your business registered for Goods & Services Tax Law. The face value does not reflect the share’s current market price. For example, if good news about a company’s products were to be announced, then the valuation of face value would increase. If terrible information about a company’s products were to be announced, then the valuation of face value would decrease.

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Depending on market conditions, the market value can fluctuate. Price fluctuations can occur due to changes in macroeconomic data, government policies, and global events. Q.3. Identify the place value and compare the given numbers 6789 and 6743. And you might have noticed the value of the same digit \(3\) in each of these numbers. Expanded form of the number 4130 is written as 4000 + 100 + 30 + 1. Place value of a digit in a number is the digit multiplied by its position value.

Save taxes with ClearTax by investing in tax saving mutual funds online. Download ClearTax App to file returns from your mobile phone. The face value of stocks may also be subject to change as a result of some corporate actions like the stock splits. In such cases companies usually split the bonds and shares with a lower face value than before. Similarly, a firm can raise capital or funds by issuing bonds. Face value is also called the par value, referring to its value as recorded in its book/digital records and share certificates.

What is Face Value in Share Markets?

Furthermore, for an investor to begin trading stocks, it is necessary to determine the face value of the shares. Any student or investor in stock markets must know many terminologies in accounting or stock markets. Any stock market investor needs to be aware of the importance of the face or nominal value. The market value represents investors’ interest in the company’s shares. Preferred stocks may be a better choice for investors with a short-term investment horizon who don’t want to hold common stocks long enough to overcome the dip in share price.

  • On the other hand, the issue price is equal to the sum of the face value of any claim and the premium on the same share asked by the company.
  • To calculate a company’s book value, we need to take the aggregate value of all its assets and deduct all the liabilities from it.
  • Q.3. Identify the place value and compare the given numbers 6789 and 6743.
  • Face value helps in calculating market value, book value, premium, return and interest to be paid etc.
  • Various systems, such as the Indian system of numeration and the International system of numeration, can be used to compute the place and face value.

Selling bonds in the secondary market depends upon the rate of interest. The interest rate and the bond’s coupon rate are inversely proportional. This states that an increase in the interest rates than the bond’s coupon rate allows the bond to be sold below par. Similarly, a decrease in the interest rates than the bond’s coupon rate lets the bond be sold above par, i.e. at the premium.

We can write a number in expanded form by the number as the sum of the place values of its digits. However, the actual market value of any bond or stock does not entirely depend upon the face value. Other factors such as supply and demand also affect the market value of any stock or a bond.

The face value is the nominal value of the shares, that is, their original cost, as mentioned in the share certificate. It is just an accounting value that could either be ₹ 1, ₹ 2, ₹ 5, ₹ 10, or even ₹ 100. If you divide it with the outstanding shares , you get the book value per share, which is ₹150. The concept of face value can be easily understood with an example of an initial public offering . Take, for instance, IRFC IPO. The face value of a single share of IRFC is ₹10.

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FIIs are those institutional investors which invest in the assets belonging to a different country other than that where these organizations are based. The dividends are the part of the annual profit which is distributed among the shareholders. This annual profit is calculated as per the face value of the share and not the market value.

The extended form assists in determining the place value of each digit in the provided integer. The face value of a digit is always the same, regardless of where it is positioned. The place value describes the position or place of a digit in a given number. We calculate a number’s place value by multiplying its digit value by its numerical value. Any digit at the unit’s place of a number will have the same place and face value. The face value of a digit is the value of a digit itself irrespective of its position in the number..


Efiling Income Tax Returns is made easy with ClearTax platform. Face value has its importance in the stock market, it helps to calculate the market value of the stock, calculate the investments and returns and also to calculate premiums. This face value is listed in the company’s bond and share certificate.

The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others. Book value refers to the value of shares in the company’s book of accounts. It is another term that is often used while investing in stocks.

  • At the time of issuing the bonds and shares, the company fixes this face value.
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  • For instance, a company going public may have a face value of Rs 10 and a market value of Rs 75.
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  • However, the market value of a share is the current price at which you buy and sell shares, and its performance depends on its demand and supply in the stock market.

Face value equals the equity share capital divided by the number of outstanding shares. However, the face value of a share does not always correspond to its market value. A share’s market value is governed by market forces like supply and demand, corporate performance, and investor outlook, and it can change dramatically over time. From the firm’s standpoint, assigning face value is essential, allowing the organization to compute the accounting value of its shares.