The estimated value of potential market price for an asset based on objective factors.
The term fair value can incorporate factors such as:
- acquisition/production/distribution costs, replacement costs, or costs of close substitutes
- actual utility at a given level of development of social productive capability
- supply vs. demand
and subjective factors such as
- risk characteristics
- cost of and return on capital
- individually perceived utility
It should be noted that a trending market reflects a dynamic fair value, while a range market reflects fluctuation between a relatively static fair value.
