Face value, Book Value, Market Value

We often hear the saying, "Don't jump into something without understanding it fully." This applies to investing in the stock market as well. Before investing, it's important to have complete information about it.

Today, we will learn about three key values in the stock market: Face Value, Book Value, and Market Value

Face Value:

The face value of a company refers to the initial value of a share when the company is started.

For instance, if $10,000 is invested in a company and it is divided into 1,000 shares, the face value of each share is $10.

Investment $10000

----------------- = Face value $10

Number of shares 1000

Book Value:

The book value of a company is the current value of the company, which is calculated by subtracting any outstanding debt from the company's assets.

(Value of company + assets) - Debt

---------------------- = Book Value

Number of shares

For example, if the value of the company is $20,000 and it has 1,000 shares, the book value per share would be $20.

$20,000

--------------= Book value $20

1,000

Market Value:

When a company is listed on a stock exchange, its value in the stock market fluctuates based on demand. This value is known as the market value of the company. It is important to note that the market value changes every day depending on demand.

In conclusion, it's essential to have a good understanding of these fundamental values before investing in the stock market. By knowing the basics, we can make informed investment decisions..

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