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Stock price

  • Stock
  • Terminology

The stock price is an important indicator of a company's value and market expectations. Investors can make more informed investment decisions by analyzing the stock price and related indicators. At the same time, companies should pay attention to stock performance, enhance their performance and market image, and maintain and improve shareholder value.

Definition: The stock price refers to the price at which shares of a company are bought and sold in the securities market. It reflects investors' comprehensive expectations of the listed company's value and future prospects, and is a direct reflection of market supply and demand.

Categories:

  1. Market Price: The current price of the stock when traded on a stock exchange.
  2. Par Value: The nominal value of the stock specified at issuance, which is usually different from the market price.
  3. Issue Price: The price of the stock at the time of its Initial Public Offering (IPO).
  4. Closing Price: The last traded price of the stock at the end of a trading day.

Formulas:

  • Price-Earnings Ratio (P/E): The stock price divided by earnings per share (EPS).
  • Price-Book Ratio (P/B): The stock price divided by book value per share.

Influencing Factors:

  1. Company Performance: The profitability and financial condition of the company directly affect the stock price. An increase in profit expectations usually drives the stock price up.
  2. Market Supply and Demand: The supply-demand relationship in the stock market is a direct determinant of the stock price. When demand exceeds supply, the stock price rises; and vice versa.
  3. Economic Environment: Macroeconomic conditions, interest rates, inflation, and other economic factors significantly impact stock prices. During economic booms, stock prices generally rise.
  4. Industry Outlook: The development prospects and market environment of the industry significantly influence the company's stock price. Companies in industries with positive outlooks generally exhibit better stock performance.
  5. Investor Psychology: Market sentiment, investor confidence, and market expectations are crucial psychological factors affecting stock price fluctuations.

Importance:

  1. Investment Decisions: Stock prices are an important reference for investors in making stock trading decisions. Proper stock price evaluation aids in value investing.
  2. Company Financing: The level of stock prices directly affects a company's ability and costs to raise funds through the stock market.
  3. Shareholder Wealth: Increases or decreases in stock prices directly influence shareholder wealth. Higher stock prices generally mean increased shareholder wealth.
  4. Market Health: The levels and volatility of stock prices are among the key indicators reflecting the health of the securities market.

Related Indicators:

  • Earnings Per Share (EPS): The company's net profit divided by the total shares outstanding.
  • Market Capitalization: The stock price multiplied by the total shares outstanding, reflecting the company's total market value.
  • Dividend Yield: Dividends per share divided by the stock price, measuring dividend return rate.

Accounting Treatment: While stock prices are not directly involved in accounting treatment, fluctuations in stock prices may impact financial dealings related to company stocks, such as stock options and fair value measurement.

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