Hey Guys, A quick question, what is difference between FV and MV ? Thanks
I believe they are one in the same. Do you have an example of where they were listed as different?
My take (but without refering to any CFAI materials, so it might need to be checked) is that market value is observable, while fair value is not; it needs to be estimated via a model. In theory, your model should give you a fair value that is a good proxy of what the market value should be.
Market value is the current price of an asset or security, which investors are willing to buy or sell at a given time. Fair Value is an arms lenghth value at which an asset or liability could be settled, between willing buyers. In a perfect world they are supposed to be the same, but due to market imperfections(e.g insider trading) they are not.
Buy this book: Value Investing: From Graham to Buffett and Beyond by Bruce Greenwald (Columbia Business School professor). You will learn all you can with regards to exploiting differences in fair value vs. market value