Market Value

For assets that trade frequently, such as shares listed on a stock exchange, market value is easy to observe. A company's market value is usually measured by its market capitalization: the share price multiplied by the number of shares.

For assets that trade less often, such as property or private companies, market value must be estimated, usually by looking at recent sales of similar assets.

Market value can differ greatly from book value, the amount shown in the accounts. A company might have net assets of 500 million on its balance sheet but a market value of 2 billion, because investors expect strong future profits or value assets, such as its brand, that do not appear on the balance sheet.

Market value reflects investors' collective opinions at a point in time and can change quickly with news, sentiment and economic conditions. It does not necessarily equal what an asset is truly worth. Investors who believe the market value is below the asset's intrinsic value may see a buying opportunity.