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Current market value is a common term that is utilized in both the world of finance and the world of business. At the core of all applications of current market value is the understanding that the cost of acquiring a good, service, or asset is considered to be reasonable and equitable. There are several key factors that go into determining a market value that is firmly base in facts and not desires.
In the world of business, current market value is often structured along the lines of considering both the attractiveness of the asset from the perspective of both the buyer and the seller. A buyer will have a very good idea on what he or she is willing to pay in order to acquire the asset, and achieve satisfaction with the transaction. In turn, the seller will have specific ideas about the amount of remuneration that would make parting with the asset desirable. Both the buyer and seller will base their expectations on several factors, such as how the asset compares to comparable services or goods, the projected life of the asset, and whether or not the asset will appreciate in value over time.
When the goal is to determine the current market value of an investment, a similar process takes place. Nowhere is this concept of current market value presented than with the sale and purchase of a bond. Generally bonds are issued as a means of raising money for a specific project. The bond buyer is often promised an eventual return of not only the initial investment, but also revenue in the form of interest. The bond seller’s goal is to convince bond buyers that the rate of return offered is comparable to the revenue that could be generated from a similar investment venture. If possible, the seller may also demonstrate how the bond could generate a slightly higher return than other options with the same level of risk.
The current market value serves as an important benchmark for any investor to consider before making a purchase. The seller must demonstrate that the purchase price of the asset is set at a rate that is competitive with current market conditions. In addition, the seller often will find it necessary to present other factors that help to increase the interest of the buyer, especially when the asset has an excellent chance of appreciating in value.
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