Article

Free Float
June 06 , 2012

Consider a company that has issued a crore shares in all. However, 25 lakh shares may lie with the promoter family, and never enter the stock market for trading. The remaining 75 lakh shares, that are traded, constitute the float or free float of the company.

In general larger the number of free float shares, better is the liquidity. A good market would have large liquidity. A very small free float may make the share price unduly volatile, since it would respond strongly to even a medium-sized buyer interested in the share.

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