Value of Shares


The value of a shareholder’s stake in the company (their share) can rise and fall. For a quick example, John and Mary each own half of the shares of the Goodwill Company Ltd.; this company has shared capital of HK$500,000, divided into 50,000 shares of HK$10 each. The company therefore has a capital of $500,000 for trading and John and Mary each own 25,000 shares. The maximum liability for Mary and John is $250,000 each (25,000 shares x HK$10 each). While the nominal value of shares is HK$10, the actual value of the share is determined by the market value. After several years of business, the Goodwill Company Ltd. has raised its asset value to HK$2,000,000. The market value for their shares has gone up to HK$40 (HK$2,000,000/25,000 shares). Mary and John’s shares are now worth over 2 Million HK dollars.

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