After Considering the Significance and Relevance of Each of the Factors

question 28

Essay

After considering the significance and relevance of each of the factors that indicate the volume and level of activity for an asset or liability is not orderly, judgment must be used to determine whether the market is active and if a significant adjustment to the transactions or quoted prices may be necessary to estimate fair value. What are some circumstances identified in FSP FAS 157-4 that might indicate that a transaction is not orderly?

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Definitions:

Chi-Squared Distribution

A statistical distribution used in hypothesis testing that is derived from the sum of the squares of independent standard normal random variables.

Positively Skewed

Refers to a distribution of data where the tail on the right side of the distribution is longer or fatter than the left side, indicating that the majority of the data points are concentrated on the left.

Degrees of Freedom

The number of independent pieces of information available to estimate another piece of information or the parameter in a model.

Number

An arithmetic value that represents a particular quantity and is used in counting and making calculations.