Price Discovery

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Price Discovery

The process by which buyers and sellers interact to determine the fair market price of an asset. See also: Law of supply and demand.
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There is, however, one important difference in the price discovery processes.
Figure 2 contains graphs of CARs calculated from the abnormal returns presented in Table 3 and illustrates the similarity in the price discovery processes.
The similarity in price discovery processes for the NYSE and the NASDAQ nontrading-hours announcements, given that an overnight period of nontrading precedes the post-announcement opening of trade on both exchanges, is consistent with the notion that the NYSE's formal call market opening mechanism and the NASDAQ's informal pre-opening price discovery process are both effective in generating an informative opening price.
As the figures show, the price discovery processes are similar to those observed for the sample as a whole, although as expected, the magnitude of the price response to the more surprising announcements is larger.
In this section, we examine price continuity following the announcements and trading volume in order to further our understanding of the price discovery processes.
how to use the standardized credit indices as the most appropriate instruments in price discovery processes and why these indices are the essential tools for short term credit portfolio management