How is it determined what a stock's price is? And who determines it?

Question

I don't understand how, everday, a stock's price is set

Answer 1

There are two ways a stock is priced.

1. From the IPO (initial price offering.) The IPO is from the issuing company that is selling shares of ownership of their company to the public. The stock price is set by the company with the advice of their investment banker. The issuing company receives the sale proceeds from these transactions, along with a hefty fee to their investment banker.

2. In the secondary market. Stock exchanges such as the New York Stock Exchange manage the trading of these stocks. The issuing company is not involved here. These transactions are between individuals like you and me. The price is set by what individuals are willing to pay. Stock prices are usually determined by the quality of the original issuing company and the company's earnings.
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Answer 2

Supply & Demand.

How much is available vs. how much do people want to pay for it.

You want to sell your old car. If you've got a Honda you may get more money for it vs. the equivalent VW model. There are simply more buyers that want Honda's than want VW's. There is also a limited number of Hondas in the market. There may also be more VW's than the market is willing to buy.

Stocks work the same way. I want to sell stock ABC Company for $50 a share. You only want to pay $38 a share. One of us will lower or increase the price to secure the sale. We'll do so based on what we think will "secure" the deal. if you won't budge.... are there other people interested? (etc.).

IPods sell close to list everywhere. There is simply more demand than there is product available (either more iPods or no competitive products that are percieved to be as good or better).

And so it goes.................................................. Supply & Demand!

Answer 3

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Answer 4

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Answer 5

on the buying and advertising floor of an exchange that's set each and each time 2 investors confirm to transact a inventory. Then that value gets pronounced and entered into the laptop. on the digital boards, comparable subject. each and each time 2 events comply with transact a inventory. In quiet markets you will locate this for your self. for example, now and returned in commodities late at evening, you may set the value your self. basically purchase a freelance from somebody who's offering to sell it at a value you opt for. If there is not lots action occurring, you will see your value look through fact the "final transaction value" for that commodity.

Answer 6

Value of stock C= d1/(1+ks)+d1(1+g)/(1+ks)^2+.....+d5(1+g)^5+S5/(1+ks)5
d1 dividend at year 1
d1(1+g) dividend at year 2
ks required rate of return on stock given by the formula ks=kfr+beta(km - krf) where krf is the risk free rate, km the market retun and beta the stock volatility.
S5=stock price at year 5 given by D6/(Ks -g)
The philosophy of this formula which is called the dividend discount model is the numerator gives the strength of operations, g the strength of strategy and denominator the managerial efficiency of a company.
When the stock price is below this price investors folk to buy these shares which drive the price to the highest point and when it goes beyond the highest price investors sell these share or shorts which drives the price down. This is the theory and philosophy of stock pricing or valuation.

Answer 7

its determined by a company's performance on each day...it rises when a company gets profits and falls when the company has losses...so its basically the market forces or the price mechanism as we say that determines all this...

Answer 8

Supply and demand.