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Article:
How To Understand The Financial Pages by: Andy George There are a number of key terms that investors should be familiar with. Though these terms are regularly banded about in many articles, they are not explained by many of the authors of these articles. The aim of this article is to explain a few more key terms which investors should be aware of when making their investment decisions. MARKET CAPITALISATION: The market capitalisation of a firm states how much the value of all the company's ordinary shares is worth based on the current share price. Hence for example if a company has 1 million shares in issue and its share price is £2 then its market capitalisation would be £2 million. This does not necessarily mean that is somebody wants to buy the company that he would be successful in acquiring the company at this price since it is usual for a premium to be paid above the current market price if someone wants to obtain control. NOMINAL VALUE: The nominal value of a company's shares is the amount that by law is credited to the Share Capital Account of the company. It is not the same as the market value of the company. Hence in the above example if the nominal value of each share were 50 cents then £'500
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