Active Market

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August 31, 2024 4 min read Definitions

Active Market: Definition and Importance

Finance Economics Investments Active Market Fair Value Accounting Asset Valuation Marking to Market Financial Instruments

An active market is a trading environment where assets of a particular class are frequently and heavily traded. This concept is crucial in fair value accounting. In the absence of an active market, pricing data may be limited, and alternative valuation methods like marking to model might be required. This article delves into the characteristics, significance, and applications of active markets.