A standard of value allows all merchants and economic entities to set uniform prices for goods and services. Standard of value is an agreed-upon worth for a transaction in a country's medium of exchange, such as the dollar or peso. This standard is necessary in order to maintain a stable economy. Typically, a standard of value is based on a commodity that is widely known and used, allowing it to serve as a measure for other commodities. For example, metals such as silver, gold, copper, and bronze have been used across history as forms of currency and standards of value.
Standard of value will largely influence the value found in business valuations because different buyers and sellers in different circumstances will view value differently.
Talk to our investment specialist