Stale price

Money word definitions on nearly any aspect of the market. A stale pricing edge occurs when a security or fund can be purchased or sold at a price that is stale with respect to current up-to-the-second information. This trading edge is as fleeting as a twenty dollar bill sitting on a busy sidewalk.

For instance, if the price of a U. The term stale price arbitrage refers to the ability to profit from prices of securities that do not reflect all of the available market information. In other words, this situation arises when hedge funds use stale prices to mark to market their holdings.

Hedge funds invest part of their money in highly illiquid instruments with stale or managed prices. As such, they smooth their returns and can manipulate Sharpe ratios. The prices of the underlying assets . A price distortion in asset markets that from using prices that are stale because of infrequent trading or lack of trading (i.e., low liquidity or illiquidity). For assets with stale prices , measured correlations may be lower than expecte and depending on the time period in question, . A stale price determines the current value of a security based on the price of a past trade and reflects no new information, which may have surfaced in the meantime.

Hence, stale pricing can serve as a trading strategy and also smooth fund returns. The time lag mentione in combination with newly available information, . Defined Term is a resource of legal, industry-specific, and uncommon defined terms to help lawyers draft more clearly, concisely, and accurately.

De très nombreux exemples de phrases traduites contenant stale price – Dictionnaire français-anglais et moteur de recherche de traductions françaises. In order to report returns at all dates, the last price of the security is often used. This is referred to as stale price bias. Valuation is relatively easy when market prices are available, but what about when market prices are not available?

Well as you know, fund boards . Managers of UK domiciled investment funds have for a number of years been aware of the risks of investors arbitraging funds valued on stale prices , and the Financial. Jacob Boudoukh, Matthew Richardson,. Marti Subrahmanyam, and Robert F. We demonstrate that an institutionalfeature of numerous mutualfunds- funds managing billions in assets-generates fund net asset values that reflect stale prices. Stale Prices and Strategies for Trading. The observed predictability in indexes and domestic mutual funds has been attributed to stale prices.

Market timing of mutual funds exploits this predictability. We show that there are few stale prices for stocks in the top few deciles of market value and that mutual funds concentrate their holding in these . Englisch Portugiesisch-Wörterbuch (Springe zu Portugiesisch Englisch). Junk-bond funds often show no change in their share prices for days or weeks, a finding that raises questions about whether the popular investment category suffers from stale pricing , an issue at the center of the growing mutual-fund trading scandals. This paper discusses how liquid assets can be used to infer fair prices of related illiquid assets.

To illustrate this idea, I show how premiums on liquid exchange traded funds can be used for the fair valuation of mutual funds that are prone to stale prices. Mutual fund returns are predictable when the. Thus the prices were stale, not because the transaction took place some time ago (non-trading), but because the price was based on out-of-date information.

Backward pricing is an example of a broader issue of traders being able to buy or sell at a “stale” NAV. That is, the price at which the investor could buy or sell the fund (the NAV) did not reflect all market information when the trader executed the trade. So a stale price trader had an advantage somewhat like placing a bet on . The stale price problem arises when traders arrange trades at predetermined prices. A price that was fair when it was determined may not still be fair when the trade takes place.

Instrument values may change in the interval. Traders who assume that the price is still fair will find that if they can easily arrange their trades , they . Attorney General Chris Koster on Tuesday filed papers in a . Despite the fact that SEC Rule 22c-dealt with the most glaring features of stale pricing , the issue persisted for funds that contained infrequently traded assets and overseas-listed security positions. In the case of less liquid securities, such as corporate bonds and small- capitalization equities, when markets make broad.