Market Value

Written By
Paul Tracy
Updated June 9, 2021

What Is Market Value?

Market value refers to the current price of an asset, market-traded security, or company. More simply, it’s used to describe the value of these on the market. 

Market value may also be referred to as open market valuation. 

Is Market Value the Same as Fair Market Value?

An asset’s market value is determined by fluctuations in supply and demand. Market value represents what someone is willing to pay for an asset, not its perceived value or its intrinsic worth.

Fair market value, however, is a general measurement of an asset’s value that’s agreed to by a buyer and seller. It tends to be more stable than market value (which is more affected by supply and demand). 

Example of Market Value

Beth is selling her house for $300,000. However, no one is willing to buy the home for more than $250,000. Even though the house is being offered at a higher price, its market value is only $250,000.

Why Is Market Value Important?

One of the most important factors when purchasing a security is its market value. Many investors (especially value investors) select securities or assets based on disconnects between market value and what they perceive the security is worth. They do this in the hopes they might have uncovered a future star for a discount price.

Ask an Expert
All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Market Value.

Are Book Value and Market Value the Same? 

Book value and market value are not the same. Book value is an asset’s value on a balance sheet, minus depreciation costs. Market value would simply be the value of that asset in a marketplace. 

If discussing a company, book value would be the company’s total value if each asset were liquidated and liabilities were paid. Market value would be the company’s total value based on current stock prices and its number of shares. 
 

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

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