Book value (net asset value) is the accounting value of a firm. It has two main uses:
1. It is the total value of the company’s assets that shareholders would theoretically receive if a company were liquidated.
2. By being compared to the company’s market value, the book value can indicate whether a stock is under- or overpriced.
3. In personal finance, the book value of an investment is the price paid for a security or debt investment. When a stock is sold, the selling price less the book value is the capital gain (or loss) from the investment.
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