how share prices are determined?

Answer 1

The prices of the shares of all the companies are determined by the fundamental principal of demand and supply.
The principal of demand & supply is very simple. If there are more buyers than the number of sellers it will lead to a situation wherein people are eager to buy, but all people cannot buy as there is not enough amount of supply available in the market. Sellers (suppliers) will also b aware of this situation and hence will start quoting higher than usual rates to gain advantage of the situation in their favour.
But naturally there will be some buyers who will still be desperate to buy even at prices which are higher than the prices which they had predetermined/ expected at the time of initially making up their mind to buy, because they still find value even at those realtively higher prices. However there may also be a situation wherein the vice versa happens i.e. there maybe more sellers and less buyers....thus leading to prices of the shares going down. However, whatever happens there willl be one point wherein the buyers wouldnot find value buying above a ertain price and the sellers wouldn't find value selling below a certain price. At this point the prices of shares will become constant. Whenever you deal in shares you will see that there are two prices- buying price and selling price.
Buying price is the highest price at which the buyer is ready to buy and selling price is the lowest price at which the seller is ready to sell.Now whatever method you take be it CAPM or the P/E(Price Earning) Ratio alll these method work upon this fundamental principle of expectation. These methods just derieve and give you a formula for calculating the expected price, but they alll work on this funda.

Answer 2

The stock market works like an auction. People are willing to pay a certain amount for a share and sellers want a certain amount to sell. The amount is based on how people feel about a company. It has very little to do with the net worth of a company. Many internet companies sold for high amounts in anticipation of high returns in the future.

Answer 3

Share prices are determined by a method called the 'dividend discount model'. It needs a discount rate which is derived using the Capital Asset Pricing Model or CAPM in short.

Answer 4

By a company's value divided by the number of shares issued by the company.

Answer 5

hi,share prices are depends up on so many factors like environmental,economical.we dint analyse those conditions.mainly . they depend up on the company,industry boom and share holder faith about that company.why because INDIAN market will depend up on other county.

Answer 6

by earnings per share, PE, industry etc

Answer 7

IT'S DERIVED BY
MARKET DRIVEN FORCES LIKE
DEMAND AND SUPPLY
FUTURE PROSPECTUS
PRICE TO EARNINGS RATIO
MARKET CAPITALIZATION
NET WORTH
CONTRIBUTION TO EX CHEQUER
ASSETS BASE
DEBT EQUITY RATIO
EPS
UEPS
AND RETURN ON INVESTMENT

Answer 8

depending of coponys quality and demand