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 ?
Moving beyond purely theoretical models, Stephen Taylor applies methods supported by empirical research of equity and foreign exchange markets to show how daily and more frequent asset prices, and the prices of option contracts, can be used to construct and assess predictions about future prices, their volatility, and their probability distributions.
This begs the question as to whether the "new normal" is one where real estate asset prices continue to stagnate for the medium term.
Overall, the outlook for shipping asset prices remains bright, but several areas are more attractive than others.
The policy debate over bubbles concerns the question of what policymakers should do when faced with a rapid increase in asset prices that does not coincide with corresponding changes in the value of the dividends these assets are expected to pay out.
Moreover, stress tests conducted by the Federal Reserve on the largest banks routinely feature large declines in asset prices, suggesting that those institutions are positioned to weather asset price changes without having to significantly pull back on their lending activities.
Leverage feedback loops in which highly levered investors facing margin calls are forced to sell off assets quickly, thus further depressing asset prices and tightening leverage constraints, are widely believed to have contributed to many past financial crises, including the U.S.
BANKING AND CREDIT NEWS-October 16, 2018--Israeli central bank believed to focus more on asset prices
M2 EQUITYBITES-October 16, 2018--Israeli central bank believed to focus more on asset prices
Global Banking News-October 16, 2018--Israeli central bank believed to focus more on asset prices
However, this study is the first attempt to prove that money demand function in Pakistan is mis-specified without incorporating asset prices in its estimation.
Why do households and institutions hold certain assets, and what effect do their asset demands have on asset prices? The traditional approach in asset pricing specifies models of optimal consumption-savings behavior and tests these models with data on aggregate or individual consumption of households, as well as asset price data.
[10] investigate the vulnerable European option pricing where the dynamics of asset prices are governed by two correlated jump-diffusion processes.