Which one of the following statements about mark-to-model valuation is correct?
A) Mark-to-model valuation is used for exchange-traded positions to ensure correct pricing.
B) Asset managers are not allowed to use mark-to-model valuation.
C) Mark-to-model valuation is used for complex financial instruments; it is always accurate and in line with potential tradable prices.
D) Mark-to-model valuation refers to prices determined by financial models, rather than actual market prices.

Question

Quizplus · Accepted Answer

Mark-to-model valuation refers to the practice of determining the current value of a financial asset or liability based on financial models or assumptions, rather than actual market prices. This method is commonly used for complex financial instruments that may not have a readily available market price. However, it is important to note that mark-to-model valuations can be subjective and may not always accurately reflect the true market value of an asset or liability.

Which One of the Following Statements About Mark-To-Model Valuation Is