Bubble, bubble, toil and trouble…what is the fair price of this pile of rubble?
So…this term revolves around the notion of "fair." Like...what is fair? And who told you the world was fair anyway?
Financially, fair (or at least fair market) means what the market will fairly and legally pay for an asset. So that means fair...as in not cash from a Somalian warlord’s leather briefcase...but rather fair as in the legitimate selling price of an excellent 2-bedroom, 3-bath shoebox in Palo Alto selling for $3M.
For something to be “of fair market,” the buyer has to be knowledgeable and unpressured, i.e. the Somalian warlord does not, in fact, have a gun aimed at the buyer’s head. Or any other body part.
And, generally speaking, the market itself has to be a legitimate market, like real estate or jewelry, or stocks, or bonds. Or whatever.
If it’s an illegitimate market, it’s uh…probably wondering why it was born out of wedlock.
Related or Semi-related Video
Finance: What makes a fair market...fair...0 Views
Finance allah shmoop what makes a market fair Well fairness
Okay so what is farewell Honest advertising for one like
if we're talking about the market for stocks and buns
A company can't claim they have a billion dollars of
profits this year when they don't Yeah regulators are picky
about accuracy that way Too many liars cheats and deceivers
stole money from hardworking farmers in the history of this
country So the feds come down hard for good reason
on those whose pants are you know on fire So
yeah honesty in Numbers is 1 definition of fair Another
is full disclosure The numbers might be accurate technically but
they're not really reflective of how well or poorly the
company actually did Like a discount rectal thermometer company might
have technically made eighty million bucks in the quarter But
if only twenty million of that profit came from the
selling of invasive temperature taking devices and sixty million came
from wild currency swings Because the company had tons of
exposure to zimbabwean dollars which had a meteoric rise in
the quarter when china agreed to take over debt payments
on all of the countries obligations in return for well
basically owning the country Then the sixty million of currency
gain on the zimbabwean dollars would be a thing the
company would have to very loudly disclosed Well odds are
good that miraculous swings like this won't happen again next
quarter Or maybe ever It's not the business that they're
in So what else makes a market fair Strict laws
Maybe an arbiter for when those laws are broken not
selling your data if you don't agree to allow them
to do so Yeah all of the above What do 00:01:42.359 --> [endTime] you think makes a market fair What a concept
Up Next
What is Fair Market Value? Fair market value is what something would sell for in the open market given the knowledge of buyers and sellers. It’s...
What is the difference between market value and book value? These two figures describe what a company is worth. Book value does this by finding the...
What is Assessed Value? Assessed value is used to determine a piece of real estate’s tax liability. An assessor measures what the property is wor...