Nature of Money: Implicit Value
The implicit value relies a lot on the personal perceptions of analysts as well as investors’ research. Meanwhile, the stocks’ implicit value lies in its creation from the perceptions of investors and analysts. The epitome is like in the pharmaceutical company. The firm has more rights to decide or own the patent for cancer treatment. So, they have more potential to the implicit value than the cornerstone.
The value here reflects revenues and earning forecasts. It depends a lot on the investors’ perceptions and expectations. Therefore, if changes occur in implicit value it means that it could generate the change in the stock price. In other words, a fall in implicit value would suffer the owners of the stock more, because their asset price is far below its original price. It is to note that it is due to the perception not because someone else gets the money.
Nature of Money: Explicit Value
Explicit value of money lies in its concreteness in the accounting value. It is from the calculation of assets and liabilities. So, the amount of money reflects the fair market value, and liabilities payment like bills and debts. Implicit and explicit value is inseparable.
