fair value

fair value
An accounting term defined by FASB. The amount at which an asset could be bought or sold in a current transaction between willing parties, that is, other than in a forced or liquidation sale. Quoted market prices in active markets are the best evidence of fair value and should be used as the basis for the measurement, if available. If a quoted market price is available, the fair value is the product of the number of trading units times that market price. If a quoted market price is not available, the estimate of fair value should be based on the best information available in the circumstances. The estimate of fair value should consider prices for similar assets and the results of valuation techniques to the extent available in the circumstances. Examples of valuation techniques include the present value of estimated expected future cash flows using a discount rate commensurate with the risks involved, option-pricing models, matrix pricing, option-adjusted spread models, and fundamental analysis. Valuation techniques for measuring assets should be consistent with the objective of measuring fair value. Those techniques should incorporate assumptions that market participants would use in their estimates of values, including assumptions about interest rates, default, prepayment, and volatility. (Note that the FASB definition in FAS 115 is replaced by the definition in FAS 133. American Banker Glossary
In the context of futures, the equilibrium price for futures contracts. Also called the theoretical futures price, which equals the spot price continuously compounded at the cost of carry rate for some time interval. Bloomberg Financial Dictionary
More generally, fair value for any asset simply refers to the perception that it is neither underpriced (too cheap) nor overpriced (too expensive). Bloomberg Financial Dictionary
The theoretical price at which a futures or options contract should trade. Dresdner Kleinwort Wasserstein financial glossary
An option value derived from a mathematical option valuation model Exchange Handbook Glossary

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fair value fair value value1

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   A term used in the futures market that represents the cash price plus the net cost of carry. The fair-value calculation for an equities index future is different for every account. It can be defined as any of the following:
   - the estimated premium over cash to allow for dividend flows and carrying costs
   - the allowance for expected dividend flows and financing costs involved in holding the contract until expiry
   - how much higher futures should be over a share index after balancing the attractive financing cost of futures against the dividends that shareholders receive
   - accounts for financing costs and share dividends
   - the difference between the interest on cash and the dividends paid on the index over the remaining life of the future.
   ► See also Futures, Carrying Charge.

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fair value UK US noun [U] ACCOUNTING, FINANCE
a way of calculating how much the assets of a business are worth based on how much would be paid for them if they were sold: »

The fair value of the investment was estimated at $89.5 million.

Financial and business terms. 2012.

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Look at other dictionaries:

  • Fair value — Fair value, also called fair price, is a concept used in finance and economics, defined as a rational and unbiased estimate of the potential market price of a good, service, or asset, taking into account such factors as: * relative scarcity *… …   Wikipedia

  • Fair value — (beizulegender Zeitwert oder auch „fairer Wert“) ist ein Begriff für den Wertansatz aus der angloamerikanischen Rechnungslegung. Laut IFRS und US GAAP ist der Fair Value derjenige Betrag, zu dem ein Vermögenswert zwischen sachverständigen,… …   Deutsch Wikipedia

  • fair value — n 1: a reasonable value (as one set by courts and regulatory commissions) for property 2: fair market value Merriam Webster’s Dictionary of Law. Merriam Webster. 1996 …   Law dictionary

  • fair value — fair market value The amount of money for which it is assumed an asset or liability could be exchanged in an arm s length transaction between informed and willing parties. The concept is essential in acquisition accounting and is covered in… …   Accounting dictionary

  • Fair value — 1) справедливая стоимость 2) стоимость в текущих ценах 3)контрольная цена, с которой производится сравнение цен на импортируемые товары во время антидемпинговой кампании Словарь бизнес терминов. Академик.ру. 2001 …   Словарь бизнес-терминов

  • Fair Value — Der Fair Value (engl. „üblicher Marktpreis“, deutscher Fachbegriff: beizulegender Zeitwert) ist im angelsächsischen Rechnungswesen (IFRS und US GAAP) der Betrag, zu dem zwischen sachverständigen, vertragswilligen und voneinander unabhängigen… …   Deutsch Wikipedia

  • fair value — Present market value; such sum as the property will sell for to a purchaser desiring to buy, the owner wishing to sell; such a price as a capable and diligent business man could presently obtain from the property after conferring with those… …   Black's law dictionary

  • fair value — Present market value; such sum as the property will sell for to a purchaser desiring to buy, the owner wishing to sell; such a price as a capable and diligent business man could presently obtain from the property after conferring with those… …   Black's law dictionary

  • fair value — For the purpose of, and as a base for, fixing the rates of a public utility:–the present value of the property of the utility as determined, not by formula, such as original cost, prudent investment, or cost of reproduction, but by consideration… …   Ballentine's law dictionary

  • Fair Value — 1. The estimated value of all assets and liabilities of an acquired company used to consolidate the financial statements of both companies. 2. In the futures market, fair value is the equilibrium price for a futures contract. This is equal to the …   Investment dictionary

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