What is a ‘Denomination’?
In dDenomination classification on the specified or nominal values of financial instruments, including currency, banknotes, coins, bonds and other investments with fixed income. The denomination can also be the base currency of the transaction and the currency in which a financial asset is quoted. This classification helps clarify the acceptable payment options of transactions.
Breaking Down The ‘Denomination’
A denomination is a unit value, most frequently prescribed in the form of real currency, such as coins and banknotes, and other financial tools that support the specified value, for example, government-issued bonds. The value is often called the nominal value, because it is noted on the front, or the person in respect of a financial instrument.
Banknotes are issued in most ATMs in USA only available in certain denominations such as $20 bills or $ 100 bills. In a trade transaction, the exporter in Europe may charge the buyer’s account in U.S. dollars, making denominated in U.S. dollars of the transaction. While most of the goods were specified in terms of the U.S. dollar, as of 2011, commodities such as crude oil may be stated in another currency such as the Euro.
Nominal value as a dignity
The face value of the bond equal to the nominal value of the bond, the amount paid at expiration. Bonds can be purchased in any currency, ranging from $50 to $10,000. When a bond is purchased, it is sold for an amount below the marked denomination, because the difference between the sale price and the value at maturity serves a function similar to interest in other investment vehicles.
The nominal value of shares may also be its value, but can be inaccurate the valuation of the securities in the market. The nominal value represents the minimum value for a specific holding. To avoid some legal obligations, many shares with a nominal value of 1 cent.
The value of collectible currency
Some currencies have a higher retail market value than the face value. For example, some us quarters produced between 1932 and 1964 were 90% silver. Although the value supports the cost of coins for 25 cents, the market value may be higher based on the current price of silver, called the melt value, as well as the condition of each coin, date and mint involved. The difference between the nominal value and cost of melt ultimately led to a change in the materials used for the production of a quarter.