Can someone explain Fair Value Pricing?

I work in investment management and have heard Fair Value and Pre-Fair Value used a lot and even though I've tried reading up on these terms I'm still uncertain what they really mean. Can someone explain them in easier terms?

Thanks!

Update:

As it relates to performance returns.

P.S. I've read all the Investopedia/Wikipedia definitions already.. so I'm looking for those to be simplified.

2 Answers

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  • Anonymous
    1 decade ago
    Favorite Answer

    Depends on the context used. Are we talking about the IRS code or the stock market or hogs or a company and their assets and liabilities, or an acquired or consolidated company, or a bank's assets, level 3 assets, or options, or a stock index futures contract?

    Here is fair market value explained

    http://www.investopedia.com/terms/f/fairmarketvalu...

    Here is fair value

    http://www.investopedia.com/terms/f/fairvalue.asp

    Here's an explanation for the S&P and Dow futures fair value pre-market, talked about on CNBC.

    http://www.allstocks.com/html/fair_value_s_p_futur...

    You can see that your question is too general. If you still don't understand, come back with a more specific and detailed question and we'll try again without writing a whole book to cover all the bases.

  • 4 years ago

    To re-iterate what Jelly Roll mentioned...P/E isn't a calculation of "user-friendly fee" of a inventory. that's a calculation of the "contemporary fee" of a inventory. that's a assessment between the inventory's contemporary value with its contemporary income (or forward-income contained in terms of PEG). Use the formulation Jelly Roll gave, or some thing comparable. you're fairly observing income enhance, sales enhance, debt, ROI, and so on...

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