Posted in Marketing and Strategy Terms, Total Reads: 325
Definition: Market Value
Market value is the amount by which an asset is sold in a given market. It is the highest price that the buyer is willing to pay and the seller will accept in an open, competitive market. The market capitalization of a publicly traded company is also referred to as the market value. This is found out by multiplying the number of outstanding shares by the current market price. The investors believe that the firm is worth this price. It is the price by which a security is trading and will be purchased or sold. Market value is important for both law and accounting.
Market value is determined in fluctuations in the supply and demand. Market value can be easily determined for stocks since they are easily available and are difficult for illiquid assets like real estate.
Market value is subject to the interpretations of the buyers and sellers about the contexts they take into consideration while determining the value of a product.
Market value is different from fair value. Fair value is dependent on the parties involved while market value does not.