Listen to a Business English Dialogue About Stated value
Mariah: Hi Aaron, do you know what “stated value” means in finance?
Aaron: Yes, Mariah. It’s the nominal or face value assigned to a security by the issuer, which may or may not reflect its actual market value.
Mariah: Right. So, it’s the value stated on the security certificate?
Aaron: Exactly. Stated value is often used for accounting and legal purposes, but it may not accurately represent the true worth of the security.
Mariah: How does stated value differ from market value?
Aaron: Well, Mariah, market value is the current price at which a security can be bought or sold in the open market, whereas stated value is a fixed value determined by the issuer.
Mariah: Can you give an example of when stated value is used?
Aaron: Sure, Mariah. Stated value is commonly used for stocks, where it represents the par value of the shares, but it can also be used for bonds or other financial instruments.
Mariah: Are there any regulations governing stated value?
Aaron: Yes, Mariah. Regulatory bodies may impose rules on how stated value is determined and disclosed to investors to ensure transparency and accuracy in financial reporting.
Mariah: How do investors use stated value in their analysis?
Aaron: Investors may use stated value as a reference point when evaluating the financial health of a company or the potential return on investment, but they typically rely more on market value for making investment decisions.
Mariah: Are there any risks associated with relying on stated value?
Aaron: Well, Mariah, one risk is that stated value may not reflect the true value of the security, leading investors to make inaccurate assessments of its worth or risk.
Mariah: Thanks for explaining, Aaron. I have a better understanding of what stated value is now.
Aaron: No problem, Mariah. If you have any more questions about finance or business, feel free to ask anytime.