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.
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References in periodicals archive ?
Members of the NBER's Asset Pricing Program met April 12 in Chicago.
The Capital Asset Pricing Model (CAPM) has been extensively used in the world of finance, for computing the expected return of securities.
The aim of our study is to analyse the role of liquidity in asset pricing in a tiny market as the Portuguese one.
It discusses the martingale, equivalent martingale measures, the fundamental theorems of asset pricing, the change of numeaire and discounting, risk-adjusted and forward-neutral measures, and hedging using contingent claims, Markovian models, and the existence of martingale measures preserving the Markov property.
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.
Schachermayer, 1994, "A General Version of the Fundamental Theorem of Asset Pricing", Mathematische Annalen, 300:463-520