# How to Calculate Nominal Value

Investors must compare nominal and real values.

The nominal value of an investment is distinctly different from its price. A bond, for example, might have a face value, or nominal value, of \$1,000, but what you pay for it will be determined by supply and demand in the marketplace. That could be more or less than its nominal value. A share of stock may have a nominal "par value" of only a few cents, or a fraction of a cent, but that's probably not what you'll pay if you want to buy it. Nominal value is commonly compared with "real value," which fluctuates with factors such as inflation.

## Step 1

Find the real value of the investment vehicle. The real value refers to the value after the item has been adjusted for factors such as inflation. For this example, assume the real value of a bond is \$2,000.

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## Step 2

Locate the price index associated with the real value of the investment vehicle. A price index is a measure of relative changes over the course of time. For the example above, assume the \$2,000 bond was associated with a price index of 200.

## Step 3

Compare the real value with the associated price index. In the example, the bond's price index of 200 means the price has moved 200 percent. (Price indexes are in percentage form.) To illustrate this point away from the bond world, think of someone comparing the value of his house (real value) against the percentage that home prices have risen or fallen in the area (price index). Comparing those two would help you find the nominal value, or the dollar price of the home when it was purchased.