fair price

Definitions (2)

1. Futures trading: Price at which the demand for a certain type of futures contract matches the availability of such contracts. In case of index futures, it is based on the spot index, the cost of carrying the underlying asset until the futures contract expires (cost of carry), and the expected dividends. In case of derivatives, the fair price is the price that doesn't allow any opportunity for profitable arbitrage. In case of common stock, it equals the spot price plus the interest costs minus the future value of the expected dividends.
There are several formulas for computing the fair price of an option, such as the Black-Scholes Option Pricing Model. also called theoretical futures price.

Use fair price in a sentence

You should always make sure that you offer your product at a fair price so that people will be happy to buy it.

​ Was this Helpful? YES  NO 5 people found this helpful.

I wondered what the fair price was going to be and I also wondered exactly how it would impact us and our business.

​ Was this Helpful? YES  NO 8 people found this helpful.

A price where the demanding of various types of future contracts go at par with the availability of such contracts is known as fair price

​ Was this Helpful? YES  NO 2 people found this helpful.

Show more usage examples...

Mentioned in these terms

Browse Definitions by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
fair price provision holding value