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Finance Dictionary and Glossary of Investment Terms
fair value
Definition 1.
Definition 1
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Definition 2.
1. The estimated value of all assets and liabilities of an acquired company used to consolidate the financial statements of both companies.2. In the futures market, fair value is the equilibrium price for a futures contract. This is equal to the spot price after taking into account compounded interest (and dividends lost because the investor owns the futures contract rather than the physical stocks) over a certain period of time.
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Definition 3.
In the context of futures, the equilibrium price for futures contracts. Also called the theoretical futures price, which equals the spot price continuously compounded at the cost of carry rate for some time interval. More generally, fair value for any asset simply refers to the perception that it is neither underpriced (too cheap) nor overpriced (too expensive).
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