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Understanding Equity, Preference Shares & Capital Market Essentials (Part 1)

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Understanding Equity, Preference Shares & Capital Market Essentials (Part 1)

Published on April 07, 2025

Introduction

Understanding equity shares, preference shares, and capital markets is essential for anyone exploring the world of finance and investment banking operations. Whether you're a student, investor, or professional, knowing the basics—like valuation methods, types of capital, IPO processes, and trading mechanisms—helps make informed decisions. This guide provides a detailed yet simplified view of key concepts to master the equity and preference share markets.

1. Important Terms in Share Market

  • Face Value: Nominal value printed on share certificate (e.g., ₹10).
  • Book Value: Net worth per share (assets - liabilities ÷ total shares).
  • Issue Price: Price offered to investors during issue.
  • Share Premium: Price received above face value (e.g., ₹120 - ₹10 = ₹110).
  • Share Discount: Issuing shares below face value (rare, special cases).
  • Market Price: Current trading price on the stock exchange.

Next: Continue reading Part 2 covering Types of Capital, Valuation Techniques, and IPO Process here: Go to Part 2

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