23/06/2025
Face Value, Fair Value, Market Value, and Book Value.
What's the difference?
The word "valuation" is used a lot in investing. There are multiple ways to express how assets are valued.
Here's a quick guide on the four most common terms:
Face Value
The original value of a security as stated by its issuer. It's typically fixed and used mainly for bonds and common stock issuance.
Fair Value
An estimate of the price at which an asset should trade in a "fair" market. This number is calculated by a private party using one of the various valuation techniques such as a discounted cash flow model.
Market Value
The current trading price of an asset. This reflects what current market price of an asset on an exchange. This price fluctuates moment by moment according to market demand.
Book Value
Calculated from a company's balance sheet. Assets minus liabilities. It reflects the accounting value of a company's equity.
