The economic objects include physical goods such as goods , merchandise or commodities and intangible goods such as services or receivables . Market price and market value must not be confused with one another. The market price is the price of a commodity, for example, that has to be multiplied by the quantity or unit of measure to obtain the market value:
For example, if someone buys three pieces of a commodity that has a market price of 20 euros each, their total market value is 60 euros. In most everyday businesses, the market value can be determined in this form based on the price. A price, in turn, arises where there is an (active) market. The active market is a prerequisite for the creation of a market value through price formation. The active market is a liquid market with homogeneous ( i.e. preference-free ) products and market prices accessible to the public ( IAS 36.5).
The value has been a legal term since May 1897 , when it first appeared in the German Commercial Code (HGB). In (3) of the German Commercial Code (HGB) it is still regulated today that the carrier has to pay compensation for lost goods , whereby the value of the goods is determined according to the market price, otherwise according to the common value of goods of the same type and quality. The Supreme Court (RG) defined in connection thereto in June 1919. the "fair market value" than that in the trade to be achieved average price, which corresponds to the trading price and the market price. It is the value that a thing has for everyone according to its objective nature. In June 1960, building law created the concept of market value in the Building Code .
The TEGoVA (The European Group of Valuer's Associations) defined the concept of market value in the real estate sector in 1997 : “The market value is the estimated amount for which a property asset on the day of valuation between a seller who is ready to sell and an acquirer who is ready to buy, after a reasonable marketing period, in a Transaction should be exchanged in the ordinary course of business, with each party acting with knowledge, prudence and without coercion. "
Market values in laws
In BewG is dispositive and tax law stipulated that valuations are based on the common value . The common value is determined by the price that would be achievable in normal business transactions depending on the nature of the asset when it was sold . All circumstances that affect the price must be taken into account. Unusual or personal circumstances are not to be taken into account (Section 9 (2) BewG). The commercial measurement requirements of para. 4 HGB set the market price to the fair value ( english fair value ) is equal. If the market is not active, the fair value must be determined using generally accepted valuation methods. Like fair value, market value is a value convention . In the case of land , leasehold rights , real estate and ships , the market value is an estimated value.
According to ImmoWertV , the ImmoWertV has been applicable since May 2010 when estimating the market values (market values) of properties, their components and their accessories . According to (1) of the Ship Loaning Value Ordinance (SchiffsBelWV) of May 2008, the lending value of ships is made up of the current market value, the average market value of the last ten years and the new construction or purchase price of the ship. According to the legal definition of (1) SchiffsBelWV, the current market value is "the estimated amount for which a ship could be sold in a transaction in the ordinary course of business on the valuation date between a seller who is ready to sell and an acquirer who is willing to buy, after a reasonable marketing period, whereby each Party acts with expertise, prudence and without coercion ”. In building law, the market value is equated with the market value ( BauGB). Most often, the market value occurs as a value convention in the derivatives ordinance applicable to investment companies , without defining it. For the derivatives regulated here , the market value is the present value of the expected future payments .(1)
Market values in various fields
Stock exchange and banking
In exchanges essence is the market price of securities , currencies or types of market price and their market value , the market value. The shareholder value is the market value of equity . The market capitalization is the market value of all the shares of a listed company , the enterprise value is the market value of the entire company. The market value and balance sheet value of companies generally differ from one another. The balance sheet value reflects the net worth resulting from a company's balance sheet . It is not suitable for explaining the market value of an entire company. The Tobin's Q is just as suitable for company valuation as asset value , income value methods or other methods. The market value is used to determine the value in various industries , such as motor vehicles or real estate .
In banking , the market value in the plays as the basis safety assessment of collateral and the bank balance of derivative banking transactions an essential role. In terms of loan collateral, real estate is given priority under banking supervisory law , and this can be applied to other loan collateral accordingly. According to Art. 4 Para. 1 No. 76 Capital Adequacy Ordinance , the market value with regard to real estate is the estimated amount “for which the real estate on the day of the valuation after appropriate marketing within the scope of a transaction carried out at normal market conditions, which the parties in knowledge of the facts , conclude prudently and without compulsion, is likely to pass from the possession of a seller willing to sell into the possession of a buyer willing to buy ”. A similar regulation can be found in (2) PfandBG as the estimated amount "for which a loan object could be sold in a transaction in the ordinary course of business on the valuation date between a seller who is ready to sell and an acquirer who is willing to buy, after a reasonable marketing period, whereby each party acts with expertise, prudence and without coercion ”. The market value of a derivative is derived from the market value of the underlying asset . There is no market value on the day the deal is concluded, after which a positive or negative market value can develop. Only the latter is to be taken into account on the balance sheet date in the form of a provision . This results in a market risk for banks from the negative change in market values.
In the insurance industry , current value , new value and replacement value are terms used that come close to market value; the fair value is also the difference between the actual price of a warrant and its intrinsic value .
In accounting , the market value and book value say something about the balance sheet or economic risk. Legal valuation regulations also ensure that the balance sheet risk does not usually exceed the economic risk. For example, if the market value of a security rises above its book value, the economic risk is greater than the balance sheet risk ( hidden reserves ). However, decreases the market value below the carrying amount, economic and balance sheet risk are the same, because the lower of a write-down dictates. The market value of interest-bearing transactions ( overnight money , time deposit ) depends on the creditworthiness of the debtor , amount, term and interest rate . Derivatives have a market value of zero at the time of the transaction and are then a balanced pending transaction on the balance sheet . Only a negative market value arising during the term represents an impending loss, for which a provision must be made in accordance with Paragraph 1, Clause 1 of the German Commercial Code . If the market value is above an assumed fair value , one speaks of an overvaluation , in the opposite case of an undervaluation .
Works of art
The market value of works of art ( visual arts , antiques ) on the art market is not an integral part of a work of art, but is attributed to it from the outside. It can hardly be determined on the basis of objective standards because subjective symbolic values emanating from the buyer meet aesthetic values . The market value of a work of art is objectified in the market price . The (objective) exchange value reflects the subjective value of an art good , which in turn is determined by the benefit provided. Valuation criteria are the level of awareness and recognition value of the artist , material value , unique item , fashion trend ; in the long term, however, the “aesthetic value” is decisive. In order to reduce the price risk, expert opinions that also confirm authenticity can be of great help.
Even professional football players have been on the transfer market , a market value. This is calculated objectively from the balance sheet value of the player at his soccer club and the multiple of the player's annual salary. Subjective characteristics that ultimately flow into the transfer fee during the transfer can also be sporting success ( goals scored ), health and age . Due to contract negotiations, contractually stipulated transfer fees or expiring contracts, the transfer fee can differ from the market value. The mathematician Christian Hesse showed in 2012 that the average market value of the Bundesliga belonging football team with her to the end of the 2007/08 Season position achieved at a very high correlation coefficient positive of 0.80 correlated so that the enormous transfer fees were justified.
- Hans E. Büschgen , Finanzmanagement , 1986, p. 66 ff.
- RG, judgment of June 16, 1919, Az .: I 61/19, RGZ 96, 124, 125
- RGZ 96, 124, 125
- Markus Bogendörfer: Dimensions of Risk Management in Capital Market -Oriented Life Insurance Companies , 2010, p. 51
- Peter Kinne : Integratives Wertemanagement , 2009, p. 24.
- Jan Scheffler, Hedge Accounting: Annual Financial Statements Risks in Banks , 1994, p. 92
- Jan Scheffler, Hedge Accounting: Annual Financial Statements Risks in Banks , 1994, p. 59
- Christian Schwarz, Derivative Financial Instruments and Hedge Accounting , 2006, p. 108
- Holger Bonus, Art of Economy: Environment and Identity , 2001, p. 16
- Isabelle Graw, The Great Price - Art Between Market and Celebrity Culture , 2008, p. 38
- Manuela Landwehr, Art and Economic Theory , 1997, p. 20
- Tasos Zembylas, Art or Non-Art: About Conditions and Instances of Aesthetic Assessment , 1997, p. 61
- the license agreement is an intangible asset in the fixed assets in the balance sheet
- Christian Hesse, Christian Hesse's mathematical hodgepodge: 1: 0 = Infinite , 2012, p. 32
- Nicholas Gregory Mankiw, Grundzüge der Volkswirtschaftslehre , 2001, p. 522