Face Value

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Face Value

Explanation: Face value, also known as par value, is the nominal value assigned to each share of a company’s common stock. It represents the initial value of the share as determined by the company at the time of its issuance. Face value is typically a small amount, such as 1 rupee or 10 rupees per share, and it is printed on the stock certificate. The face value of a share does not necessarily reflect its market value, which is determined by supply and demand in the stock market.

Face value can change due to corporate actions such as stock splits, bonus issues, or rights issues. In a stock split, for example, a company may decide to divide its existing shares into multiple shares, thereby reducing the face value per share while increasing the number of shares outstanding. Conversely, in a bonus issue, additional shares are issued to existing shareholders without any consideration, resulting in an increase in the number of shares outstanding without affecting the company’s total equity.

Example: TCS has a face value of 1 rupee. This means that each share of TCS’s common stock is originally issued with a face value of 1 rupee. However, it’s important to note that face value can change due to corporate actions. For instance, if TCS were to announce a stock split, such as a 1:2 split, the face value per share would decrease to 0.50 rupees, while the number of shares outstanding would double. Corporate actions like these can alter the face value per share but do not affect the overall value of the company.

You can view the Face Value of any stock on the topmost section of any company on Radar.

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