Stock Market Value Definition

Stock market value is the price at which a stock can be bought or sold at a stock exchange. It reflects the market's expectation regarding the value of a stock. Combined market values of leading individual stocks are used to produce the market index, which tells investors the overall market value.

  1. Market vs. Book Value

    • Market value is the current price of a stock and can change several times during a single day, reflecting the demand. It is different from the book value, which is what someone actually paid when they bought the stock. The book value remains the same as long as that buyer owns the stock.

    Market Capitalization

    • Market value is an important indicator because it tells investors how much a company is worth at any moment. By multiplying the current market value--price of a stock--by the total number of shares available to buy, investors can work out the total value of a company--its market capitalization.

    Intrinsic Value

    • Some investors believe the market value does not reflect true value of a stock. They think sometimes the market overvalues or undervalues a stock. Using various techniques, they try to determine the intrinsic value of a stock, hoping they can profit from finding investments whose real value is higher than the current market value.

    Overall Stock Market Value

    • People who invest in funds that track the overall stock market performance are less interested in the market value of a particular stock. They want to know the overall value of the market, represented by indexes such as Dow Jones Industrial Average, S&P 500 or FTSE 100. These are aggregate values of leading stocks.

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