What Does nominal value Mean
The idea of value can refer to the level of fitness or usefulness of something . In the field of accounting and economics, value is the equivalence that exists between two things, generally taking into account a currency.
Value, on the other hand, can be a document that represents an amount loaned or participation in a commercial company. In this context, the nominal value is called the figure with which a commercial document is issued (such as a share ).
Said nominal value is the original , the ideal or the theoretical one . Instead, the actual value is the result of a specific measurement at a specific time. In general, the face value arises by convention, rule or agreement.
In a share, the par value is set by its issuer and appears in writing. Suppose a company begins trading on the stock market and in its first issuance of securities, it issued 10,000 shares with a par value of $ 50 each. Over time, the price of the shares may change. Thus, a stock that was bought for $ 50 can be sold for $ 45 or $ 58 , to name a few possibilities. This means that the real value of the shares becomes, depending on the case, 45 or 58 dollars , and no longer 50 dollars of the nominal value.
In a company that has partners through shares, for example, the nominal value of the shares of each plays a fundamental role. Why? Because precisely the nominal value that these have will determine which of the members has more or less weight within the company to be able to make decisions. Thus, for example, in a vote anyone may have more relevance what the partner with shares worth 500,000 euros chooses than the one who has 1,000 euros in shares votes for it.
In a similar sense, a company in the dairy sector can launch a milk that it sells in one-liter carton packs at 10 pesos , specifying said nominal value on the box. However, due to inflation , a few months later that same product begins to sell for 12 pesos . The real value of the product, therefore, increased 2 pesos .
In addition to all the above, it is necessary to know other relevant data about the nominal value such as these:
-Play a fundamental role in what are the studies and analyzes that are carried out at the time of being able to know the real state of the economy of a country. Specifically, to discover the growth of the economy of that nation.
- Mortgages, bonds or promissory notes can also be analyzed in depth through what would be the nominal value they have.
-Within the field of metrotechnics, it is spoken of as the value obtained as a result of the measurement that has been carried out when analyzing some data.
-In the field of engineering, on the other hand, when talking about nominal value, we are referring to the value that is given to a part, installation or device in question in order to distinguish it from the real value.