STOCKS: 

The government or semi government organization sometimes   raises a loan from public, at a certain fixed rate or interest. Bonds or Promissory notes each of a fixed value are sold to the public. If a person purchases a bond of Rs. 100 at which 10% interest is fixed, then the holder has Rs. 100 stock at 10%. Rs. 100, in this case, is called the face value of the stock. Stocks can be sold and bought in the open market, through brokers at stock exchanges. The broker's charge is called brokerage. For all theoretical purposes brokerage is calculated on the face value. If not mentioned otherwise, the face value of one unit of stock, should be taken as 100. Moreover, brokerage is also calculated on the basis of the face value. Brokerage makes buying costlier and selling cheaper.

When we say, \(({\rm{Rs}}{\rm{.}}\;n\;{\rm{stock,}}\;\,x\% \;\,{\rm{stock}}\;{\rm{at}}\;y)\), we mean a stock whose face value is \({\rm{Rs}}{\rm{.}}\;n\). Market value of the stock is \(y\) and the annual interest rate or annual dividend rate is \(x\% \) of the face value. 

The selling price of Rs. 100 stock is said to be:

at par: selling price of the stock is exactly Rs. 100

above par (at a premium): selling price of the stock is more than Rs. 100

below par (or at a discount): selling price of the stock is less than Rs. 100

SHARES: 

Some people together associate to form a company. The company invites the public to subscribe. The required capital is divided into small parts called shares. Each share is of particular fixed value. Parts of the profits distributed among the shareholders are called dividends. The original value of a share is called its nominal value. The current price of the share in the market is called its market value.

IMPORTANT RESULTS

• Stock = Face value of each share × Number of shares
• \({\rm{Annual}}\;{\rm{Income}}\; = \;\cfrac{{{\rm{Dividend}}\;{\rm{rate}}\;(\% ) \times {\rm{stock}}}}{{100}}\)
• Yield % or Annual rate of return or Rate of investment
  \(\cfrac{{{\rm{Net}}\;{\rm{Return}}\;{\rm{on}}\;{\rm{Investment}}}}{{{\rm{Cost}}\;{\rm{of}}\;{\rm{Investment}}}} \times 100\)
   \(=\cfrac{{{\rm{Fv}}\; - {\rm{Iv}}}}{{{\rm{Iv}}}} \times 100\)
  where  \({\rm{Fv}}\)= Final Value of the Investment and \({\rm{Iv}}\) = Initial Value of the Investment