What is Issue Price?

What is issue price

What is Issue Price?

The issue price is the cost at which newly introduced shares get sold among the buyers for the first time.

Issue Price is the price at which new shares are introduced for the first time for sale in the market. Let us gather more knowledge about the issue price of the company’s shares.

Example: When the Facebook company issued its company shares at $100 to each investor. The total share price was $ 100 billion, and it is divided into shares, and each share costs $ 100.

It was the initial issued price. Then, the market starts fluctuating, and the prices of shares keep on fluctuating because they are connected to the market.

Who Issues the Bonds?

A newly registered company issues its shares in the market. Any person can buy bonds, a relative, or anyone who wants to buy the company’s shares.

The initial public offering is the first step towards preparing and sharing the stock of the company in the share market. 

Who can we Calculate the Issue Price?

Firstly, determine the recently issued bonds of the company that is introducing their share in the market. You can calculate the issue price by collecting some information such as-

  1. The total number of company’s shares issued
  2. The remaining profits from the issue
  3. The charges of commissions or some fees linked to issuing of shares

After getting all this information, you can easily calculate the issue price of the company’s shares. 

Add the remaining profits with the charges of commission to get the value of total returns from the capital distribution. 

Then, divide the total returns from the total number of shares issued by the company.

Who can Invest in the Company’s Share at an Issued Price, and how?

There is no restriction to investing in stocks; any person who has money to invest can buy the company’s shares. 

  1. Decide the Company: Firstly, you should have knowledge about the share market and then decide you want to buy the initial shares of which company. Decide the company by knowing more about them and taking advice from people who are already involved in the share market
  2. Arrange Funds: Arrange the funds to invest in the shares of the company. You can either use your savings to buy the shares or can borrow a loan from any government or non-government institution. 
  3. Open an Account: Then, you have to open a Demat account online, or you can contact a broker who will provide you with the shares. If you are opening a Demat account, you will have to add your personal details such as name, address, date of birth, and photo of any identity proof. If you physically fill a form, you have to fill in the same details in the form provided by the broker. 
  4. Bidding: You have to bid for the shares of the company, and it is according to the total numbers of shares available and the demand of the shares of that company. The company decides the price range, and the investor has to bid in that allotted price range. 
  5. Allotment: After this whole process, the shares are allotted to the investor, which is visible in their Demat account, and they can see them whenever they open their account. 

Benefits of Buying Shares at an Issued Price?

You can buy the shares at low prices, and you can earn big when the shares’ price increases due to market fluctuation. 

You can access the information as a big investment because you have bought the shares at the initial stage. 

Final thoughts

After understanding all the aspects, it is clear that the issued price is the price at which the company issues its bond in the market. It is mostly done to raise money to expand their business. 

Frequently Asked Questions

How to buy company shares at an issued price?

You can buy it through brokers or directly buy it from the company by opening an online Demat account.   

Why do companies issue shares?

Companies need an investment to run and grow their business, and for that, they distribute their shares in the market to run the operations and raise capital. 

Who decides the issue price?

A company that is introducing and selling their shares for the first time in the market decides the issue price of the shares with the help of their managers.