Asset Price

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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 ?
Because asset prices exceed fundamental value, investing in a bubble is 'bad' investment (economically speaking).
Empowerment cannot be measured in any simple fashion, for example by the rate of increase in selected asset prices.
Matthijs Breugem, Frankfurt School of Finance and Management, and Adrian Buss, INSEAD (France), "Institutional Investors and Information Acquisition: Implications for Asset Prices and Informational Efficiency"
Asset prices (stocks and real estate) rebounded though never surpassing their 1967-1968 peaks in real terms.
In their article titled "Increased credit availability rising asset prices help boost consumer spending" (Economic Letter, Federal Reserve Bank of Dallas, April 2016, http://www.
Global asset prices continued to pick up in the third quarter as equity markets rose in nearly all countries and declining bond yields boosted prices in most sovereign bond markets, Moody's Investors Service said in a quarterly report published today.
The reason is this: extremely easy monetary policies have inflated asset prices.
He said that such moves have only helped to increase asset prices to unrealistic levels.
As borrowing costs rise and asset prices fall, markets have turned treacherous.
The empirical evidence will seek to identify and estimate the sign and response of asset price bubbles to interest rate changes, exploiting the potential differences in the joint behavior of interest rates and asset prices during bubbly episodes, in comparison to normal times.
I have suggested that all asset prices are bubbled," he said on Bloomberg Radio early Friday.
1) Greenspan (2010) also notes a connection between interest rates and asset prices but stresses the role of global savings patterns and other determinants of long-term rates rather than the short-term policy rates that are most closely connected to the actions of central bankers.

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