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Hello sir,
I would like to ask with regards to level 2 inputs, a) those quoted prices for similar assets or liabilities in active market, b) quote prices for identical or similar assets or liabilities in market that are active, c) inputs other than quoted price that are observable for the asset or liability.
Is there sub-hierachy for this level 2, which means like we need to see whether the a option is available 1st and then if not available then go to b and c? or there is no hierachy within the level 2 inputs?
Besides, can u explain more about the interest rates and yield curves observable at commonly quoted intervals? not really understand what it means.
Also, may I ask what is implied volatilies & credit spread? how to use it to determine fair value?
The highest and best use of an asset << this sentence is apply to which level of input of fair value? Is it only apply to level2? which means we need to choose the highest value of the similar asset fair value?
At last, what is the difference between similar and identical asset?
Sorry for too many questions to askThanks
Hi,
Some of our queries are more related to SBR, so I won’t answer those as it will only lead to confusion. I’ve cleared up the ones that are FR related as follows:
Similar vs. identical – identical would be two shares in the same listed company e.g. Apple whereas similar would be when you have a share in an unlisted business that hasn’t got an active market but there is a similar company that has shares that are traded. So if you held shares in Mars (privately owned) then you would look at a listed company’s shares that has operations that make chocolate bars, so Nestle.
Highest best use – applies to non-financial assets (e.g. buildings/IP) and so there is very little scope for level one to e used so more likely to be a level two application.
Sub-hierarchy – no there is no further hierarchy, the standard is just giving possible situations where this level would be useful.
Thanks
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