Definition of Unit Price
A mutual fund’s NAV is the market value of the fund. When a trading day comes to a close, the NAV is calculated based on the fund’s portfolio of security holdings. NAV per share involves taking the fund’s assets, subtracting the fund’s liabilities and dividing by the number of fund shares outstanding. This value determines the fund’s bid price, or the price used to purchase fund shares, and the redemption price, the selling price of the fund’s shares back to the fund.
Example of a Unit Price
Assume the Mucho Moola mutual fund has $100 million in assets, $45 million in liabilities and 13 million shares outstanding by the end of a trading day. The fund’s NAV equals its $100 million in assets, subtracted by $45 million in liabilities, or $55 million. The NAV per fund share equals the NAV divided by the fund's 13 million shares outstanding, or $4 per fund share. The $4 price per fund share will determine the next trading day’s bid and redemption prices.
Definition of a Stock Price
A stock price represents the market valuation per share of a company. Different variables affect a company’s stock price – the company’s financial condition and earnings, future growth expectations, industry trends and current economic conditions. A stock price fluctuates constantly due to market conditions.
Example of a Stock Price
Stock prices are available for all publicly traded companies and published by major business news sources. It is possible to estimate the value per share of a company and compare it to the actual stock price. This comparison can give you an idea whether a stock price is overvalued or undervalued. Stock price valuation calculators are available online and utilize several variables to estimate the company’s value per share.