• Weighted average actual price

    The most common method for valuing listed shares under the former ESS rules was to use the weighted average actual price that the shares were traded on that stock market during a week.

    The market value on a particular day is the weighted average of the actual prices at which those shares were traded, on a particular stock market, during the one week period up to and including that day, where:

    • a share is quoted on the stock market of an approved stock exchange on that day
    • there is at least one transaction in shares of that class during the one week period up to and including that day.

    Example: Weighted average actual price

    Calculating the market value of Happy Ltd shares for Wednesday 7 May.

    The market value will be the weighted average actual price of Happy Ltd's shares traded on the stock exchange for the five trading days in the week from Thursday 1 May to Wednesday 7 May inclusive.

    An enquiry of the stock exchange reveals 52,000 Happy Ltd shares were traded over these five days, at the following actual prices:

    4,000 shares @ $2.20

    10,000 shares @ $2.35

    8,000 shares @ $2.20

    30,000 shares @ $2.40

    The weighted average actual price is calculated as follows:

    (12,000 x $2.20) + (10,000 x $2.35) + (30,000 x $2.40)
    52,000

    $121,900
    52,000

    = $2.3442

    The market value of Happy Ltd's shares on Wednesday 7 May is $2.34.

    End of example
      Last modified: 01 Jul 2015QC 27239