Stock Market Value refers to the value of stocks traded in a particular market. In specific cases the market capitalization and the market value of debt attributed to a particular stock is its Total Market Value.
Generally the value of a particular stock is measured at different levels by different methods of analysis, but it is important to note that there are two basic parameters to check the value of stocks. They are:
Book Value
The term used in the UK for Book Value is ‘Net Asset Value’ which almost completely explains the meaning of term in brief. Book Value is derived from the balance sheet of a company, where its overall worth is reflected. In other words it is also the fundamental worth of the company - the term ‘company fundamentals’ is widely used in the stock market.
According to Investopedia, “In personal finance, the book value of an investment is the price paid for a security or debt investment. When a stock is sold, the selling price less the book value is the capital gain (or loss) from the investment”.
Market Value
The market value of a stock is determined on the basis of the investor’s impression of the potential of a company’s stock to perform well in the medium to long term. It is widely used across different industrial and commercial segments to explain the long-term potential value of a particular commodity. The term has particularly widespread use in the real estate industry.
Market value takes into account the image formed by the company in its target market. This may sometimes result in the overpricing of certain stocks but overall it gives a fair idea about the value of the stock.
Intrinsic Value
This is another example of an analysis that includes all aspects of a company’s business, both in term of its tangible and intangible assets. It is called Intrinsic value because it goes beyond the book value in quantifying the tangible assets and beyond the market value in quantifying intangible assets. Investors seeking intrinsic value in a stock expect the value of their investments to exceed the existing market value of the stock.
The stock market has different analytical methods to value stocks and other investment options in the market. Accordingly different levels of values evolved in relation to the performance of different stocks, options and futures apart from other investment options such as debt instruments.