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 ?
Asset Pricing Program Director Monika Piazzesi of Stanford University and Research Associate Luis M.
It also covers stochastic calculus and multi-period financial asset pricing models leading to no-arbitrage pricing of contingent claims; the theory of risk aversion and utility; the theory of Markov chains and its applications to credit risk modeling; and optimal consumption and investment problems and interest rate modeling.
After providing a bit of empirical motivation via a brief look at data from Japan's stock and land price boom and bust of 1985-91, we study implications of the central model of traditional asset pricing, in which price is simply expected discounted future dividends.
The 12 essays in 2B review advances in consumption-based asset pricing, bond pricing, the risk behind hedge fund strategies, credit derivatives, measuring investment performance and market risk, and understanding the behavior of individual investors.
Recognizing the role of extrapolative expectations in asset pricing will make monetary and macroprudential policy both more robust and more complex.
We can conceptualize these micro--foundations of asset pricing by reflecting on the thought process that an investor undertakes when she sees that a firm's stock price has risen.
Beginning with the 2006 price setting, the Board will use only a capital asset pricing model (CAPM) to determine a return on equity (ROE) that reflects the return earned by private-sector service providers.
Standard theories of asset pricing assume that investors purchase assets with their own wealth.
Editorial covers such areas as accounting/finance, asset pricing, banking/finance, capital markets/finance, computational finance, corporate finance, derivatives, portfolio analysis, regulation, systemic risk and stock market analysis, among others.
We rely on the same model of asset pricing discussed earlier, with two exceptions.
Asset pricing models like Capital Asset pricing model, Arbitrage Pricing theory, Option pricing models have been developed to understand the pricing techniques used in the markets.
The topics include consumption-based asset pricing, disaster risk and its implications for asset pricing, the axiomatic approach to risk measures for capital determination, a review of empirical research on the design and impact of regulation in the banking sector, information on peer-to-peer crowdfunding and the potential for disruption to consumer lending, and an overview from an investments perspective of real estate price indices and price dynamics.