What is Market Value?
Market value refers to the current or most recently-quoted price for a market-traded security. It can also refer to the most probable price an asset, like a house, would fetch on the open market. See also fair market value.
How Market Value Works
The market value of anis determined by fluctuations in supply and demand. It should be noted that market value represents what someone is willing to pay for an -- not the value it is offered for or intrinsically worth.
For example, say a person is selling their house for $300,000. However, no one is willing to buy the home for more than $250,000. In this case, even though the house is being offered at a higher price, its market value is $250,000.
Why Market Value Matters
One of the most important factors when purchasing a security is its market value. Many investors (especially value investors) pick securities or assets based on disconnects between market value and what they perceive the security is worth, hoping they might have uncovered a future star for a discount price.
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