Question

What is a share's nominal value?
A) The current market value of the share
B) The maximum value that can be paid for a share.
C) The maximum value that the share can be sold for.
D) A fixed amount that represents the notional value of the share’s worth.

Answer 1

Hint:
The nominal value, or face value, of a share, is usually assigned when the stock is issued. Also called the par value, the nominal value of the share is its redemption price and is generally stated on the front of that stock. It's the stated value of the stock, as opposed to the market value of the security. The market value of a share reflects what the market is willing to pay for the same.

Complete step by step solution:
Nominal value is defined as the original value of a share.
So, a fixed amount that represents the notional value of the share's worth is a nominal value of a share.

Therefore, option (D) is the correct answer.

Note:
Don’t get confused with the three values of shares which are used. The relationship between market value, face value (Nominal value) and book value:
Face Value: It remains mostly constant. It is the value defined during the start of the company.
Book Value: It consists of reserves per share which keep on growing with time. With the addition of profits of the company the reserves also grow.
Market Value: It takes under consideration Book Value as well as built value or market price.
Thus, it can be proved from the above statement that:
Market Value = Book Value + Built-up Value.