82,853
edits
Mark-to-market: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) No edit summary Tags: Mobile edit Mobile web edit |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 1: | Line 1: | ||
{{anat|isda|}}The [[market value]] is the value of an [[asset]] by reference to its [[market price]] — ie what folks are prepared to pay for it at the particular point in time, rather than by assessing the value of the fundamental components of the asset. The latter involves ineffable wisdom, technical analysis and cojones of steel — and at times of stress is apt to make an owner feel aggreived at the world; the former is a bit like sticking something on eBay — hence, “[[Mark to market|marking to market]]” — and yields an instant answer if not necessarily gratification. | {{anat|isda|}}The [[market value]] is the value of an [[asset]] by reference to its [[market price]] — ie what folks are prepared to pay for it at the particular point in time, rather than by assessing the value of the fundamental components of the asset. The latter involves ineffable wisdom, technical analysis and cojones of steel — and at times of stress is apt to make an owner feel aggreived at the world; the former is a bit like sticking something on eBay — hence, “[[Mark to market|marking-to-market]]” — and yields an instant answer if not necessarily gratification. | ||
Marking-to-market is an accounting approach, for valuing your business. In the absence of a better idea, it is to treat the value of something you have ''not'' sold as if you ''had'' sold it. Regular readers will not be surprised to hear that this can lead to confusion, disappointment and colossal regret. They may, however, be surprised to hear there have been many many financial professionals — ones who, similarly, should not have be surprised to hear that — who in fact have had the frights of their lives finding it out over the 30 years since mark-to-market accounting became ''de rigueur''. | |||
As long as the bid is “[[firm bid|firm]]”<ref>Meaning the person making the bid is prepared to trade at that price.</ref> and the market [[liquid]]<ref>Meaning there are lots of people in the market for that asset at that time</ref> then however estimable your fundamental valuation techniques, you can’t argue about a [[market value]]. | As long as the bid is “[[firm bid|firm]]”<ref>Meaning the person making the bid is prepared to trade at that price.</ref> and the market [[liquid]]<ref>Meaning there are lots of people in the market for that asset at that time</ref> then however estimable your fundamental valuation techniques, you can’t argue about a [[market value]]. | ||