Asset Price

Asset Price

The amount one pays for an asset when buying it. The price represents the amount of value the market has assigned, fairly or unfairly, to an asset. Normally, prices are expressed in terms of money, but this is not always the case; for example, one may trade four chickens for two sheep.

Asset prices tend to be regulated by the law of supply and demand; that is, the price of an asset increases with smaller supply and/or greater demand. A corollary to this is the idea that commoditization drives prices down because it increases supply (sometimes vastly) while leaving demand the same. Prices likewise rise when the value of money declines. Governments can and have controlled the prices of certain assets by subsidy or decree. This is usually an anti-inflationary measure and tends to distort, rather than eliminate, the law of supply and demand. It is thus not generally sustainable as a mechanism for controlling price.
References in periodicals archive ?
Dubai: After going through a period of balance sheet repair and asset price recovery, Gulf banks are expected to see a period of gradual rise in non performing loans (NPLs).
a) What are the effects of monetary policy interventions on asset price bubbles?
Economic commentators often assert that major asset price booms and busts are closely associated with variations in the terms of borrowing to fund risky asset purchases.
The BIS said, 'By fostering risk-taking and the search for yield, accommodative monetary policies thus continued to contribute to an environment of elevated asset price valuations and exceptionally subdued volatility.
The asset price response to the FOMC minutes has declined since 2008, suggesting greater transparency by the Committee.
Rome: India's new central bank governor, Raghuram Rajan, called on Tuesday for regulators to exert greater caution when faced with the potentially inflammatory mix of asset price inflation and easy credit.
Considering their importance and the amount of effort that has gone into understanding them, asset price bubbles continue to perplex.
When the asset arrived at the client's predicted asset price during the given time period, it is time to accumulate the profits.
Summary: Loose global monetary conditions are stoking credit and asset price booms in some emerging markets that could lead to a new financial crisis, the Bank for International Settlements, or BIS, warned on Sunday.
Just imagine an environment where financial market participants, wanting to lock in their profits from being long or short in some asset, would call for the Fed to act to support a continued rise in the asset price or burst an incipient bubble.
Previously, in this correspondence section, I had warned that we would have to suffer a prolonged period of inflation in order to bring asset prices into line with the 'real' economy because of the Labour administration's insistence on not recognising asset price inflation as inflationary.
monetary policy issues, and the growing need for better analysis and understanding of asset price bubbles.

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