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Market price of risk |
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Market price of riskA measure of the extra return, or risk premium, that investors demand to bear risk. The reward-to-risk ratio of the market portfolio.Market price of risk Similar MatchesTight marketTight marketA market in which volume is high, trading is active and highly competitive, and consequently spreads between bid and ask prices are narrow. Efficient marketEfficient marketA market in which, at a minimum, current price changes are independent of past price changes, or, more strongly, price reflects all (publicly) available information. Some believe foreign exchange markets to be efficient, which in turn implies that future exchange rates cannot profitably be predicted. Rembrandt marketRembrandt marketThe foreign market in the Netherlands. Book to marketBook to marketThe ratio of book value to market value of equity. A high ratio means is often interpreted as a value stock (the market is valuing equity relatively cheaply compared to book value). This is the same as a low price-to-book value ratio. Value managers often form portfolios of securities with high book to market values. Market priceMarket priceThe price for a security. As far as stocks are concerned, there is not one market price but two:the bid price - the price at which you can sell shares which you ownthe offer price - the price at which you can buy sharesOn the London markets, prices for most shares are quoted by market makers who act as 'wholesalers', and are flashed up on brokers' SEAQ screens. The quote will also show the maximum order size at which the market- maker is prepared to deal at the prices quoted (known as 'normal market size'). The difference between the bid and offer price is called the spread and is the source of the market maker's profit.Prices for the largest companies are quoted on the Stock Exchange Electronic Trading Service (SETS) which matches sellers and buyers directly and does without the need for market makers. The spread on these companies is normally smaller.Market prices are quoted on the financial pages of most newspapers and on many websites, sometimes live, sometimes delayed by 20 minutes. In the newspapers, the price quoted is neither the bid nor the offer price, but the mid price at the time the market closed on the previous day. So if a share closed at 105-109, the mid price would be 107. On some websites the price quoted is the 'last trade' price -that is the price at which the last automated trade on the previous day was made. Further SuggestionsNational Market SystemFinancial market Factor market Median market cap Segmented Market Eurocurrency market Negotiated markets Italian Derivatives Market (IDEM) Market narrow market Liquid market Breadth of the market Comparative market analysis Intermarket Surveillance Information System (ISIS) Normal Market Size (NMS) Security market plane Technical condition of a market Forward market market value Mark to market Broad Market Capital market imperfection Free capital markets Sensitive market emerging markets |
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