The company has determined the share price?

Answer:

The company’s stock price is theoretically determined by adding the projected future dividends, calculated according to the Gordon model. The equation for the growth model Gordon, also known as models of discounting of dividends, are as follows:

Given the value of a stock = (dividend per share) / (discount rate – growth rate)

The above equation refers to the current value of the shares is similar forever, because it is assumed that the dividends of the company will be recorded and known during all term of payment of dividends. It is easy to see, however, that while stock prices are determined by conceptual the expected future dividends, many companies do not pay dividends. Many market forces have also contributed to the price of the shares of the company.

Generally speaking, the stock market is driven by supply and demand, like any market. When the shares are sold, the buyer and seller to exchange money for equity ownership. The price at which purchased becomes the new market price. When the second share is sold, this price is latest market price, etc.

The more demand for the stock, the higher its price and Vice versa. The more you offer, the lower its price and Vice versa. So while in theory, the initial placement of shares placement of shares (IPO) at a price equal to the value of the expected future dividend payments, the share price varies depending on supply and demand.

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