What is the nominal value?

Also known as the nominal value or accounting value, the nominal value is a determined asset value because it is in a certain period of time. This type of value identification is used in many different applications and can relate to prices associated with securities or other assets. In most settings, the nominal value differs from the actual value, which is the value of the assets modified to allow inflation.

With investment activity, the nominal value is sometimes identified as a nominal value. In this application, the deadline concerns the currency value of security based on the price issuing the company set for the asset. It has nothing to do with what is perceived as the market value of security. An exception would be a bond problem for which the purchase price is determined by an issuer at a lower price than the nominal value, due to the fact that the bond will be worth at the time when the tool matures.

with any situation involving fixed income security will be the truthSimilarly nominal value identified as a nominal value. Here the nominal value represents what these security costs are currently. If security has received a type of actual return rate from its purchase, this value will be higher than the purchase price. In situations where security is traded at a lower price for a unit than when it was purchased, the nominal value is lower today than the original purchase price.

Other terms can be used at the point of nominal value depending on the settings. When reference to the value of investment goods, the nominal value is often called accounting value . This is commonly seen in the business of used cars, where buyers and sellers will be less interested in what the vehicle is originally worth, and more focused on what is currently considered to be the value of this vehicle.

The identification of the nominal value is often useful in that it serves as the basis for calculating the actual asset value. For example, assuming that asset prodanFor $ 500.00 in US dollars (USD) in 1995, and depreciation was not provided, this number could be adjusted to introduce inflation and find out the actual value of this asset in 2005, 2006 or any year 1995.