WHAT IS MARKET VALUE



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MARKET VALUE AND BOOK VALUE

3 Answer(s)


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Book value is the price paid for a particular asset. This price never changes so long as you own the asset. On the other hand, market value is the current price at which you can sell an asset.

For example, if you bought a house 10 years ago for $300,000, its book value for your entire period of ownership will remain $300,000. If you can sell the house today for $500,000, this would be the market value.

Book values are useful to help track profits and losses. If you have owned an investment for a long period of time, the difference between book and market values indicates the profit (or loss) incurred.

The need for book value also arises when it comes to generally accepted accounting principles. According to these rules, hard assets (like buildings and equipment) listed on a company's balance sheet can only be stated according to book value. This sometimes creates problems for companies with assets that have greatly appreciated - these assets cannot be re-priced and added to the overall value of the company.

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market value is nothing but the value that prevails in the market for the particular assets, but book value is nothing but what price you bought a product and you don't change the value of the product till you own it.

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Book value is nothing but your Assets - Liability or net worth of the company or shareholders equity and Market Value is but book value+premium( intangible benefits)+premium(supply and demand)