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?



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

  • 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

    Here is fair value

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

    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...

Still have questions? Get your answers by asking now.