Business, Legal & Accounting Glossary
Nominal Value is defined as the value at which a stock or a security is issued. It cannot be equated with the market value of the stock. Market value is not fixed and fluctuates constantly. In the case of fixed-income securities, the nominal values are the same as the face value. In the case of capital goods, the nominal value is also known as book value.
The process for calculating nominal values takes into account the prices of the present year. This includes a rise in prices due to inflation. As a result nominal values are sometimes referred to as current values.
The concept of nominal value is different from real value. As per the discipline of economics, the nominal value is a daily value of a particular item, whereas real value is an inflation-adjusted expression of an item’s value. In the case of nominal value, there are various sets of values for successive years.
Much of this could be attributed to the difference in price levels. A problem with nominal values is that the difference in price levels is not indicated properly. This problem is not there in case of real prices.
The concept of nominal value is also used in a number of other economic concepts. Those may be enumerated as below:
Some important concepts that are associated with the nominal value may be mentioned as below:
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This glossary post was last updated: 27th March, 2020 | 0 Views.