NOMINAL VALUE Meaning and
Definition
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Nominal value refers to the face or stated value of a financial instrument, such as a stock, bond, or currency, that is specified at the time of issuance. It represents the initial price or amount that is assigned to the instrument when it is first issued or created, and it is often printed on the instrument itself. The nominal value is primarily used for identification purposes and does not necessarily reflect the true or current market value of the instrument.
In the context of stocks and bonds, nominal value typically indicates the amount of money that the issuer guarantees to pay the investor at a future date, known as the maturity date. For example, a bond with a nominal value of $1,000 means that the issuer is obligated to repay the bondholder $1,000 when the bond matures. Similarly, the nominal value of a stock represents the stated par value or face value of the shares.
While the nominal value remains constant throughout the life of the instrument, its market value may fluctuate based on various factors such as supply and demand, interest rates, economic conditions, and investor sentiment. Therefore, the market value of a financial instrument may be higher or lower than its nominal value. Nonetheless, the nominal value serves as a baseline or reference point for calculating interest payments, dividends, or other financial obligations related to the instrument.
Common Misspellings for NOMINAL VALUE
- bominal value
- mominal value
- jominal value
- hominal value
- niminal value
- nkminal value
- nlminal value
- npminal value
- n0minal value
- n9minal value
- noninal value
- nokinal value
- nojinal value
- nomunal value
- nomjnal value
- nomknal value
- nomonal value
- nom9nal value
- nom8nal value
Etymology of NOMINAL VALUE
The word "nominal" has its roots in the Latin word "nomen", which means "name". The term "nominal value" refers to the stated or named value of something, often used in the context of financial or monetary terms, such as shares, currency, or bonds. The word "value" comes from the Latin word "valere", which means "to be strong, be worthy". So, when combined, "nominal value" essentially means the name or stated worth of something.
Similar spelling words for NOMINAL VALUE
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