How are shares priced?

Shares are priced based on expectations of future growth and profitability for a company. If those expectations are dashed, share prices can fall. One way to estimate this growth is by looking at the dividends a company pays to its shareholders, which represent profitability.

How are share price indices calculated?

Share price indices are calculated from the prices of common shares of companies traded on national or foreign stock exchanges. They are usually determined by the stock exchange, using the closing daily values for the monthly data, and normally expressed as simple arithmetic averages of the daily data.

Is a share price fixed?

A share price – or a stock price – is the amount it would cost to buy one share in a company. The price of a share is not fixed, but fluctuates according to market conditions. It will likely increase if the company is perceived to be doing well, or fall if the company isn’t meeting expectations. How are share prices determined?

Why should you look at a stock's share price?

Looking at a stock’s share price is only useful when taking many other factors into account. A stock's price indicates its current value to buyers and sellers. The stock's intrinsic value may be higher or lower. The goal of the stock investor is to identify stocks that are currently undervalued by the market.