What is Mark to Market?
Mark-to-market or fair value accounting refers to the accounting standards of assigning a value to a position held in a financial instrument based on the current fair market price for the instrument or similar instruments.
It does so by using the current market value of the asset in an attempt to take account of the potential profits or losses the holder has made on the asset. The main drawbacks of the system are that short-term market fluctuations may mean it doesn’t give a fair representation of the asset’s long-term value.
The mark-to-market system is most usually used for complicated assets such as derivatives. This is where people trade the right to buy shares in the future rather than trade the actual shares themselves. But technically mark-to-market can be used for any type of asset.
Strategy of Wealth
Wealth Resources By Country
| Financial Capitals of the World |
| |
Copyright © 2008. Strategy of Wealth. All Rights Reserved.
Technical Analysis on the Singapore and U.S. Markets. Providing in-depth alerts for traders and investors
Wealth Queries
Ask a question, post a query or ask an expert a question...
