A:

The nominal value, or book value, of a share is usually assigned when the stock is issued. Market value reflects what the market is willing to pay for it. These two values may differ tremendously as a result of different market conditions as well as supply and demand. As soon as the stock is issued, the market begins trading shares to new investors, and the price often fluctuates wildly. To calculate the difference between nominal and real values, simply subtract the lesser value from the higher. The nominal value may be listed on the share or obtainable from publicly available data. Current market values are available from stock exchanges and a wide variety of online sources.

Nominal values may be issued arbitrarily to common stock and recorded on a company balance sheet. These funds are invested directly in the company that issued the stock as a means of infusing cash into the business. The stock represents ownership of a piece of the company. Preferred stock may have a specific nominal value that also reflects an amount the company owes the shareholder at a later date. Common stock may be more likely to lose value relative to preferred shares and may have a bigger spread between the nominal and market value.

With the impact of inflation or deflation, the nominal value may have little relationship to the real value when the shares are sold. These economic forces may impact the stock differently than the actual assets of the company, so even as balance sheet values change, the market value of the stock may be substantially different.

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