Business Mathematics and Statistics · Ch 7 — Stock and Shares
Distinction Between a Share and Stock
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Distinction Between a Share and Stock
Although "share" and "stock" are often used loosely to mean the same thing in everyday speech, in business mathematics they refer to two distinct kinds of security with different arithmetic conventions. The table below sets out the differences that matter for calculation.
| Basis | Share | Stock |
|---|---|---|
| Meaning | The smallest equal unit into which a company's capital is divided | A fixed-income security issued in bulk (government stock / bond / debenture) |
| Return | A variable dividend (for equity) or a fixed dividend (for preference), reckoned on face value | A fixed rate of interest, reckoned on nominal value |
| Unit of denomination | Issued in fixed units of a set face value (e.g. ₹10, ₹100 each) | Quoted and held per ₹100 of nominal value; any fractional amount can be held |
| Numbering | Each share is distinctly numbered | Not individually numbered |
| Paid-up status | May in principle be partly paid | Always taken as fully paid |
| Ownership vs lending | An equity shareholder is a part-owner of the company | A debenture / bond holder is a creditor (lender) of the issuer |
| Market quotation | Quoted as a price per share (e.g. "₹100 share at ₹120") | Quoted per ₹100 nominal (e.g. "9% stock at 90") |
Definition 1Nominal value of stock
The face amount of stock held, always reckoned per ₹100; interest on stock is calculated on this nominal value, not …
Definition 2Quotation "at"
The market price of a security: for a share it is the price per share; for stock it is the price of ₹100 of nominal stock (so "9% stock at 90" means ₹10 …