Question

I will definitely down vote, if essay is inappropriate
8) Is Valuation on investments at fair value is a best reforms ? if not , Explain?

Answer 1

"Valuation on investments at fair value" is an important and broad topic. Fair value is the sale value of an asset  mutually agreed by the seller and buyer . Both are aware of the current market price of the said asset. The fair value of securities are determined by a market where they are traded. To determine fair value of a security , it is being listed in stock exchanges. The price of the security fluctuates daily on the basis of upwards and downward trends in the market. Stock exchange is the reliable method to determine the value of a stock at any given date and time and this has brought a good reform in investment perceptive.

The fair value of a derivative is determined by the value of an asset. If a shareholder buys a 50 call option on ABC stock he is buying the right to purchase 100 shares of ABC stock at $50 per share for a specific period of time. If the price of that stock increases the value of the option on the stock also increases

Similar method is applicable in Future market as well. Here fair value is the equilibrium price for a future contact the point where the supply of goods matches demand. This is equal to the spot price after taking into account compounded interest over a certain period of time.