A distance that is not large enough when the annoying store clerk has rancid breath. In truth, arm’s length market means you don’t know the person you’re doing business with (on a personal level).
This term can apply to many areas of business. For example, if you’re purchasing stock in McDonald’s, you probably don’t know any of the executives of the company who would likely have inside information regarding how well or poorly this quarter was going. You don’t have insider info, and you’re not involved in a relationship with anyone who is involved in McDonald’s.
This can also apply to real estate (like when you buy a home). If you don’t know the person you’re buying from or selling to, this is considered an arm’s length transaction in which you’ll pay (or receive) a fair price. If you’re not operating within arm’s length, and you’re not paying fair market value, you might have to pay some fancy taxes.
Related or Semi-related Video
Finance: What is mark to market?2 Views
Finance a la shmoop what is mark-to-market?
alright well Google was private for a long time before it went public public [Google timeline appears]
mutual funds bought the shares of the company when it was private, the company
did a few later stage B C and D rounds before going public in 2004 and each
iteration those subsequent rounds valued the company more highly so a mutual fund
invested say 20 million dollars in the B round they would have seen the C round
done at maybe double the valuation and while that mutual fund would then
mark to market or mark up their twenty million dollar investment to now be
worth forty million dollars even though the stock of goog was not yet publicly
traded and then it came along the D round which was done at triple the [D round investment appears]
valuation of the C round so then those shares of goog would have to be again
marked up or marked to the new current market valuation which was three times
the previous rounds valuation of 40 million aka a hundred twenty million
bucks today eventually the company did go public and there was no longer need [Google stock price rises on graph]
to mark its value to the market because well the market valued it basically
every second of the trading day if you want to learn more about all this stuff
well then you can just you know google it
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