Net asset value

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Net asset value (NAV)

The value of a fund's investments. For a mutual fund, the net asset value per share usually represents the fund's market price, subject to a possible sales or redemption charge. For a closed-end fund, the market price may vary significantly from the net asset value.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Net Asset Value

In stocks and businesses, an expression of the underlying value of the company. That is, it is a statement of the value of the company's assets minus the value of its liabilities. One way of thinking about the net asset value is that it is the underlying value of a company, not the value dictated by the supply and demand of shares or its market capitalization. It is also called the book value.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Net asset value (NAV).

The NAV is the dollar value of one share of a fund. It's calculated by totaling the value of all the fund's holdings plus money awaiting investment, subtracting operating expenses, and dividing by the number of outstanding shares.

A fund's NAV changes regularly, though day-to-day variations are usually small.

The NAV is the price per share an open-end mutual fund pays when you redeem, or sell back, your shares. With no-load mutual funds, the NAV and the offering price, or what you pay to buy a share, are the same. With front-load funds, the offering price is the sum of the NAV and the sales charge per share and is sometimes known as the maximum offering price (MOP).

The NAV of an exchange traded fund (ETF) or a closed-end mutual fund may be higher or lower than the market price of a share of the fund. With an ETF, though, the difference is usually quite small because of a unique mechanism that allows institutional investors to buy or redeem large blocks of shares at the NAV with in-kind baskets of the fund's stocks.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

net asset value

the asset value of a company to its ordinary shareholders. This consists of the BALANCE SHEET value of total assets (FIXED ASSETS plus CURRENT ASSETS) LESS CURRENT LIABILITIES, DEBENTURES, LOAN STOCK and PREFERENCE SHARES. These net assets can be divided by the number of ordinary shares to indicate the net asset value per share.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
References in periodicals archive ?
Third, soft budget constraints are more likely to arise when the liquidation value of a project is smaller and the return from the project and its success probability are larger.
The estimated liquidation values of the liabilities are subtracted from the estimated proceeds to arrive at an estimated net proceeds amount.
Instead of focusing on liquidation values, the reader of the typical financial statement would probably be much better served by seeing an estimate of the price-per-share value of the sponsor as if it were offered for sale as a continuing enterprise.
Stumpage value is the market price for standing timber ready for immediate harvest (also called timber liquidation value).
If critics complain that today's historical cost-based financials don't provide adequate information to users of financial statements, what will those same critics say if they're given reproduction cost information when they want liquidation values, or vice versa?
If some firms underestimate liquidation values, we would also expect to find that the excess return assuming costless liquidation is negatively related to the gap between going-concern value and liquidation value.
"6" Borrowing base exceeds net liquidation values of collateral.
As a result you have liquidation values being presented by appraisers in the guise of market value."
On the other hand, fair value measurements could approximate liquidation values for some assets and liabilities, but not others (e.g., any probabilistically weighted estimate).
The market-to-book ratio is designed to estimate the relation between going concern and liquidation values, where the book value of assets is used as a proxy for the liquidation value of the firm.
Most commentators believe that the proper valuation approach for this purpose is a "going concern" approach, as opposed to using liquidation values. To determine going concern value, the prevailing view appears to be that the FMV of the debtor's assets should include tangible assets, as well as goodwill and other intangible assets (e.g., patents and trademarks).(7) However, some commentators advocate the use of a valuation approach that essentially measures the replacement value of only hard assets.(8) The problem with the replacement value approach to insolvency valuation is that it values the individual assets and liabilities of a business, rather than the whole business as an ongoing enterprise.
Liquidation values in a specific case will generally vary from the fair market values found in appraisals because of the specific circumstances unique to a particular plan of disposal.