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Understanding the Current Price and its Types in Different Markets

current price


In terms of finance, the current price is the last traded price of a financial security. It is the most reliable indicator of a security‘s current value. The current price of a security depends on the demand and supply forces. One can value their investment portfolio at the current price to their net worth.

What is the current price?

Current price is the most recent selling price of any financial instrument. It can be a stock, bond, currency or a commodity like precious metal (like gold coin and silver coins). In terms of stocks, it is called the last traded price (LTP). One can consider it as the most reliable indicator of a financial securities‘ present value.

Also, it is only an indicator of the value of the last selling price of a security. The trading price for the next transaction can be higher or lower based on demand and supply factors. The current price can be above, below or same as the fair value or intrinsic value of the security. By just looking at this, it is difficult to determine the fair value.

However, for equities, one can use the price in tandem with other financial indicators like EPS and book value. It is used to determine whether it is overvalued or undervalued.

Understanding the current price

Current price is also the current market price or value of security like stock, bond, or commodities like precious metals (like gold coin and silver coins). It is the LTP at which the security was purchased or sold. Current price is the price which the buyer is willing to buy, or the seller is willing to accept.

Current price is only an indicator of the next probable trading price of a security. It doesn’t guarantee that the next price will be the same. The next trading price can be higher or lower than the current trading price. However, predicting the next probable price at which the security will trade is possible by considering the historic price along with the current price.

One can estimate the current value of shares using different technical analysis tools. But one cannot guarantee the accuracy of their analysis. This is because the current price is a function of market demand and supply forces.

Financial analysts value an investment portfolio at the current price. It will help in determining the returns from an investment.  They determine the portfolio’s profit or loss by subtracting the cost from the current value.

Types of the current price

Current Price in Over the counter costs

It is the price of a security sold over the counter, rather than on an exchange. One can determine it on the basis of the current bid price (listed by buyers) and the current ask price (listed by sellers). In an OTC market, it fluctuates on the basis of the demand and supply.

Current price on bond market

To determine the current price of a bond one can compare the current interest rates to the interest rate of the bid. Subsequently, the face value or par value of the bond is adjusted based on the remaining interest payments that are due until the bond’s maturity. Also, as the bond reaches maturity, the gap between the current value and the face value reduces and becomes equal on maturity.  

Current price in the retail sale

The current price of an item in a retail store is the value at which one can purchase it at that moment. Also, when the item is on sale, the price will be lower than the retail price.

What is the current price in mutual funds?

Unlike stocks and financial securities, mutual funds do not have a current market price. Mutual funds trade at their NAV or net asset value. NAV is the market value of per unit of a mutual fund. But one cannot determine the NAV by the market demand and supply forces. The calculation of NAV involves subtracting all liabilities and expenses from total assets and then dividing it by the number of mutual fund units.

A lower NAV of a mutual fund doesn’t mean the mutual fund is available at a lower price. NAV only represents how the underlying assets have performed in the previous months or years. The NAV of a mutual fund will go up if the underlying securities value rises. The NAV of a mutual fund goes down if the underlying securities value falls.

A mutual fund’s return is calculated using NAV. The return from the fund is calculated based on previous NAV or at the NAV at which the mutual fund was purchased. A higher NAV doesn’t mean the mutual fund is a good investment option. Nor, a lower NAV indicates that the mutual fund is not suitable for investment.

Investors shouldn’t consider NAV as a standalone indicator to invest in mutual funds. The returns from mutual funds are one of the main parameters one should consider before investing in a fund. Apart from returns, investors should also look at the portfolio, fund manager, their finances, goals and understanding of risk before investing in mutual funds.

What is NAV, and why is it important for mutual funds?

Net Asset Value is the current price of a mutual fund unit. The NAV is determined based on the market value of the securities in the portfolio, liabilities and on the number of units the fund has. A mutual fund’s NAV is the difference between the total assets and total liabilities upon the total number of units.

NAV = [Assets – (Liabilities + Expenses)] / Number of outstanding units

Mutual funds are allotted to investors at the NAV. Also, when an investor wishes to redeem their mutual fund investments, the redemption is done at NAV. The fund house publishes the NAV of a fund on a daily basis. Therefore, once can buy and sell units of a mutual fund at the net asset value.

For open ended schemes, an investor can buy or sell the units at the NAV. On the other hand, close ended schemes have fixed maturity. One can invest in a close ended scheme only during its initial issue. Post the subscription, one can buy and sell only the existing units. Hence, the market value of these units varies from the fund’s NAV because of the demand and supply factors.

Therefore, NAV determines the price at which an investor can buy or sell a mutual fund. Also, change in NAV determines the growth from a mutual fund. Increase or decrease in NAV has an impact on the mutual fund returns.

How to check the NAV through Scripbox?

NAV is the total value of the mutual fund’s investment, less expenses and liabilities. One can check the net asset value of a fund through Scripbox. An individual can visit the Scripbox website and select the fund for which they wish to know the NAV. Upon opening the fund page, Scripbox provides all the information related to a fund. Information such as Net Asset Value, Category, Fund analysis, AUM, Expense ratio, historical NAV, investment objective, fund manager, etc. Also, Scripbox provides the asset allocation break up of a mutual fund scheme.

The graphical representation of the NAV of a fund will help investors to have a view of the fund’s growth. The graphical representation is easy to interpret and understand. 

One can easily get all the information related to a mutual fund through the fund page. Also, Scripbox provides a return calculator and a comparison with other instruments. The calculator helps the individual to estimate future returns and compare the return with other instruments for the same duration. Additionally, one can also easily invest in the mutual fund through Scripbox.

Published on September 25, 2020