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Asset specificity is a term related to the inter-party relationships of a transaction. It is usually defined as the extent to which the investments made to support a particular transaction have a higher value to that transaction than they would have if they were redeployed for any other purpose.
Technology firms, such as Apple have "low barriers to entry and high barriers to exit, exacting steep switching costs on users who dare to defect." Leaving the Apple platform of technology would cause a customer to lose all of their downloaded content, including music, movies, applications, games, and more critical date such as virtual panic ...
Large institutional asset owners such as pension funds (with typically long-dated liabilities), insurance companies, sovereign wealth and national reserve funds have a generally low likelihood of facing liquidity shocks in the medium term, and thus can afford the required long holding periods characteristic of private-equity investment.
The highest-yielding stocks are also the lowest-priced stocks in the venerable average, as the lower a stock (or bond) goes in price, the higher the attached yield or coupon becomes. 24/7 Wall St ...
Calculating option prices, and their "Greeks", i.e. sensitivities, combines: (i) a model of the underlying price behavior, or "process" - i.e. the asset pricing model selected, with its parameters having been calibrated to observed prices; and (ii) a mathematical method which returns the premium (or sensitivity) as the expected value of option ...
This only works as long as there are enough new "greater fools" willing to pay higher and higher prices for the asset. Eventually, investors can no longer deny that the price is out of touch with reality, at which point a sell-off can cause the price to drop significantly until it is closer to its fair value, which in some cases could be zero.
An asset with a known price in the future must today trade at that price discounted at the risk free rate. Note that this condition can be viewed as an application of the above, where the two assets in question are the asset to be delivered and the risk free asset. (a) where the discounted future price is higher than today's price:
Common terms for the value of an asset or liability are market value, fair value, and intrinsic value.The meanings of these terms differ. For instance, when an analyst believes a stock's intrinsic value is greater (or less) than its market price, an analyst makes a "buy" (or "sell") recommendation.