Level 2 Assets

Level 2 Assets
Assets that do not have regular market pricing, but whose fair value can be readily determined based on other data values or market prices. Sometimes called “mark to model” assets, Level 2 asset values can be closely approximated using simple models and extrapolation methods using known, observable prices as parameters. Part of an overall requirement of publicly-traded companies is that they are required to report to investors the makeup of their assets based on certainty of fair value calculations.

An example of a Level 2 asset is an interest rate swap, where the asset value can be determined based on the observed values for underlying interest rates and market-determined risk premiums.

The classification system including Level 1, Level 2 and Level 3 assets came about as a result of Financial Accounting Standards Board (FASB) Statement 157, which requires public companies to allocate all assets based on the reliability of fair market values. Level 2 assets are the middle classification based on how reliably their fair market values can be calculated. Level 1 assets are the easiest (such as listed stocks, bonds), while Level 3 assets can only be valued based on internal models or “guesstimates” and have no observable market prices.


Investment dictionary. . 2012.

Игры ⚽ Поможем сделать НИР

Look at other dictionaries:

  • Level 1 Assets — Assets that have readily observable prices, and therefore a reliable fair market value. Level 1 assets include listed stocks, bonds, funds, or any assets that have a regular “mark to market” mechanism for pricing. Publicly traded… …   Investment dictionary

  • Level 3 Assets — Assets whose fair value cannot be determined by using observable measures, such as market prices or models. Level 3 assets are typically very illiquid, and fair values can only be calculated using estimates or risk adjusted value ranges. In… …   Investment dictionary

  • Assets inflation — is an economic phenomenon denoting a rise in price of assets, as opposed to ordinary goods and services. Typical assets are financial instruments such as bonds, shares, and their derivatives, as well as real estate and other capital goods.… …   Wikipedia

  • Level 3 Communications — Infobox Company company name = Level 3 Communications, Inc. company company type = Public (Nasdaq|LVLT) foundation = 1985 location = Broomfield, Colorado, USA key people = James (Jim) Q. Crowe CEO industry = Communications Backbone products =… …   Wikipedia

  • Level Load — An annual charge deducted from an investor s mutual fund assets to pay for distribution and marketing costs for as long as the investor holds the fund. For the most part, this fee is paid to intermediaries for selling a fund s shares to the… …   Investment dictionary

  • monetary assets — Assets, such as cash and debtors, that have a fixed monetary exchange value and are not affected by a change in the price level. If there are no regulations requiring companies to account for changing price levels, monetary assets remain in the… …   Big dictionary of business and management

  • Evaluation Assurance Level — The Evaluation Assurance Level (EAL1 through EAL7) of an IT product or system is a numerical grade assigned following the completion of a Common Criteria security evaluation, an international standard in effect since 1999. The increasing… …   Wikipedia

  • Disproportionate Assets — is a term used in India to describe a situation where an individual s net economic assets significantly exceed the assets he or she should possess after accounting for the assets that he or she previously held and all legal sources of income. [1] …   Wikipedia

  • Goodwill To Assets Ratio — A ratio that measures how much goodwill a company is recording compared to the total level of its assets. The goodwill to assets ratio is useful for monitoring a company s use of goodwill. Although many companies record some form of goodwill,… …   Investment dictionary

  • Liquidation Level — In forex trading, the specific value of a trader s account below which the liquidation of the trader s positions is automatically triggered and executed at the best available exchange rate at the time. The liquidation level is expressed as a… …   Investment dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”