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Fair Value |
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Fair value 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. More generally, fair value for any asset simply refers to the perception that it is neither underpriced (too cheap) nor overpriced (too expensive). Fair Value What Does Fair Value Mean? (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, the equilibrium price for a futures contract. This is equal to the spot price after taking into account compounded interest (and dividends lost because the investor owns the futures contract rather than the physical stocks) over a certain period. Investopedia explains Fair Value The “fair value” quoted on TV refers to the relationship between the futures contract on a market index and the actual value of the index. When futures trade above fair value, this means that traders are betting that the market index will go higher; the opposite is true if futures are trading below fair value. Related Terms: How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| During calendar year 2006, the Financial Accounting Standards Board (FASB) issued three Statements of Financial Accounting Standards (FAS 155, 156 and 157) and one Proposed Statement (The Fair Value Option) that relate to fair value. The Public Company Accounting Oversight Board has issued a staff Q&A about auditing the fair value of share options granted to employees. org) has issued a standard that provides enhanced guidance for using fair value to measure assets and liabilities. |
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