Importance of understanding market value...

Importance of understanding Market value...

What is Market value?

Market value is the price buyers are willing to pay for an asset in the marketplace. In the case of publicly-traded assets or entities, it is also known as market capitalization and is calculated by multiplying the current price by the number of outstanding units. There are a few components that go into calculating the market value of some assets such as businesses and real estate, it involves a lot more than knowing about share prices. The business market value determination can also take components such as the value of intangibles and the future value of related assets into consideration. Market value is more than a price but denotes the true underlying and?not only the perceived value.

Why is market value important?

One of the main reasons why market value is important is because it provides a concrete method?that eliminates ambiguity or uncertainty in determining what an asset is worth. In the marketplace,?customers and sellers often have different perceptions of the value of a product. Buyers will wish?to pay less, while sellers hope to receive more. The primary goal of determining market value is to?provide a fair assessment of the worth or value of the asset. In simple terms, it is the price at which?the item would normally be sold. Buyers have the option of paying, while sellers also have the option of accepting more or less than market value.