Terminology of Share MarketThe main thing which trade on any share market is Shares. First I will explain what is share?. If any company want to divide its authority in to other parties what they do is break the value of the company in to pieces. The smallest valuable piece of the company is normally knows as a share. On share market this pieces of companies were traded. In Sri Lanka Colombo Stock Exchange is the authorized market which got the legal permission to trade the shares of Sri Lankan Companies or any foreign companies which do their operations on Sri Lanka. If we consider on shares there are so many types of shares available on market and it got unique features. Following are several terminology of share market which is widely use in this share business and it is much important to get know these terminology while you are in to this investment methodology.

Nominal Value

Average Nominal value of Colombo Stock Exchange is 10 rupees and this may get vary company to company. Normally Nominal value of the company is the Initial Public Offering Value. This is the basic value of the share but you cannot get the share for same price at Market . In Market the value of share changes according to companies performance and other external impacts.

Share Splitting

Sometimes companies splitting their shares by considering different factors. The main thing happened in share splitting is reduce shares nominal value. For example ABC Company reduces their nominal share value 10 rupees to one rupee. If you got 100 shares before, you get 1000 shares after spiting the shares. Numbers of shares you hold get increase from this step but the financial value may not change.

Share Consolidating

This is the total opposite of Share Splitting. From this method company can increase their nominal value. For example ABC Company increases nominal share value one rupees to 10 rupee. If you got 100 shares before, you get 10 shares after share consolidating. Numbers of shares you hold get decrease from this step but the financial value of you holdings may not get affected.

Issue Price of Share

The price of share at Initial Public Offering is mentioned as Issue Price. In most companies Issue price is same as Nominal value of share. Most attractive companies got more attractive issue price and normal average issue price of companies are 10 rupees, but this may get vary.

Market Value of Share

Share trade price at secondary market is mentioned as market value. This value gets change in trading and you can get market value of share from Colombo Stock Exchange trade Summary.

Face Value of share

The value of Bond or debenture mature is known as face value. Normally face value indicates in bond certificate paper.

The mentioned terminology of share market says the basic understanding of the words and sometimes it may got very detailed definitions. There are so many terminology of share market which is widely use on this investment business and I am plan to explain those in very details in my future posts.