- May 27, 2021 at 5:42 pm #621938fizaaliMember
- Topics: 50
- Replies: 36
Sir, if you don’t mind asking me that you said in your answers & lecture that (quoting) “It is investors who determine the market value & they are not affected by company tax. We always discount at the investors required rate of return when calculating the market value, and this is pre-tax.”
What I know about market price is that it is the price at which buyers & sellers make the trade in Stock Exchange BUT I’m confused about how can the investor set the market value of the security because I thought it was the company who set the market price for the investors & they have a right to buy OR not to buy if they think that the market value of the security (shares) is high enough for them to buy & they simply can’t afford! (or in case anybody wants to sell their shares they want the market price to be high enough to sell their shares giving them high returns).
Thanks!May 28, 2021 at 7:57 am #621986John MoffatKeymaster
- Topics: 56
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The stock exchange is a market where shareholders buy and sell shares from each other – the money is not going to the company and the company does not fix the market value.
When a company first issues shares the money goes to the company, but from them on they are traded on the stock exchange and no more money goes to the company.
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