Question

In: Accounting

What can we do to understand the change in the fair value of the securities? Why...

What can we do to understand the change in the fair value of the securities?

Why would it be important to know whether any securities are traded on a foreign exchange?

Solutions

Expert Solution

It can be calculated for the assets that are traded, but not for the products that are being liquidated. It can be a challenge to calculate the fair value if there are no obviously visible market prices. The point of this is to define the price or value that is fair for both sides, the seller will not be on the losing side, and the buyer will end with a satisfying price

We can calculate by using the P/E (price to earnings) ratio.

Also by using discounted cash flow method.

When you're making trades in the forex market, you're basically buying or selling the currency of a particular country. But there's no physical exchange of money from one hand to another. That's contrary to what happens at a foreign exchange kiosk—think of a tourist visiting Times Square in New York City from Japan. He may be converting his (physical) yen to actual U.S. dollar cash (and may be charged a commission fee to do so) so he can spend his money while he's traveling.

Since trades don't take place on a traditional exchange, you won't find the same fees or commissions that you would on another market. Next, there's no cut-off as to when you can and cannot trade. Because the market is open 24 hours a day, you can trade at any time of day. Finally, because it's such a liquid market, you can get in and out whenever you want and you can buy as much currency as you can afford.


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