Definition of market value
- determining the car's market value
- The house sold below market value.
: a meeting together of people for the purpose of trade by private purchase and sale and usually not by auction
: the people assembled at such a meeting
: a public place where a market is held
: to expose for sale in a market
: to deal in a market
: the monetary worth of something : market price
: a fair return or equivalent in goods, services, or money for something exchanged
: relative worth, utility, or importance
: to consider or rate highly : prize, esteem
: to estimate or assign the monetary worth of : appraise
: to rate or scale in usefulness, importance, or general worth : evaluate
The market value of an asset is determined by fluctuations in supply and demand. It should be noted that market value represents what someone is willing to pay for an asset -- 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.
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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