What is the difference between book value and market value?

Book value refers to the value of an asset or company as recorded on its financial statements, calculated by subtracting liabilities from assets. It represents the net worth based on historical cost and accounting methods. Market value, on the other hand, is the current price at which an asset or company can be bought or sold in the open market. It reflects what investors are willing to pay based on supply and demand, and can fluctuate frequently. The key difference is that book value is based on accounting principles, while market value is influenced by investor perception and market conditions.