The process of providing a market for asecurity. Normally, this refersto bids and offers made for large blocks of securities, such as thosetraded by institutions. Listed options may be used to offset part of therisk assumed by the trader who is facilitating the large block order. Seealso:Hedge ratio.
Thereturnattributable to a particularcommon factor. We decomposeassetreturnsinto common factor components, based on the asset'sexposures to common factors times the factor returns, and a specificreturn.
Amount at which anassetwould change hands between two parties,where both have knowledge of the relevant facts. Also referred to asmarket price.
Theequilibrium priceforfutures contracts. Also called thetheoreticalfutures price, which equals thespot pricecontinuously compoundedatthecost of carry ratefor some time interval. In the context of corporate goverance, Fair-Price provisions limit the range of prices abidder can pay in two-tier offers. They typically require a bidder to payto all shareholders the highest price paid to any shareholder during aspecified period of time before the commencement of a tender offerand do not apply if the deal is approved by the board of directors or asupermajority of the target's shareholders. The goal of this provision isto prevent pressure on the target's shareholders to tender their sharesin the front end of a two-tiered tender offer, and they have the result of making such an acquisition more expensive. A majority of states havefair price laws.