FAIR VALUE

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Fair value is the sale price agreed upon by a willing buyer and seller, provided both parties enter the transaction freely and knowledgeably.

 Fair value is also the value of a company’s assets and liabilities when a subsidiary company’s financial statements are consolidated with a parent company.

 The most reliable way to determine investment’s fair value is to list the security on an Exchange. Assuming a stock trades on an exchange, market makers provide a bid and ask price for the stock. An investor can sell the stock at the bid price to the market maker at the ask price.

 Investdata Academy

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