Mark To Market - MTM

1. A measure of the fair value of accounts that can change over time, such as assets and liabilities. Mark to market aims to provide a realistic appraisal of an institution's or company's current financial situation.

2. The accounting act of recording the price or value of a security, portfolio or account to reflect its current market value rather than its book value.

3. When the net asset value (NAV) of a mutual fund is valued based on the most current market valuation.

1. Problems can arise when the market-based measurement does not accurately reflect the underlying asset's true value. This can occur when a company is forced to calculate the selling price of these assets or liabilities during unfavorable or volatile times, such as a financial crisis. For example, if the liquidity is low or investors are fearful, the current selling price of a bank's assets could be much lower than the actual value. The result would be a lowered shareholders' equity.

This issue was seen during the financial crisis of 2008/09 where many securities held on banks' balance sheets could not be valued efficiently as the markets had disappeared from them. In April of 2009, however, the Financial Accounting Standards Board (FASB) voted on and approved new guidelines that would allow for the valuation to be based on a price that would be received in an orderly market rather than a forced liquidation, starting in the first quarter of 2009.

2. This is done most often in futures accounts to make sure that margin requirements are being met. If the current market value causes the margin account to fall below its required level, the trader will be faced with a margin call.

3. Mutual funds are marked to market on a daily basis at the market close so that investors have an idea of the fund's NAV.


Investment dictionary. . 2012.

Look at other dictionaries:

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  • mark-to-market — A method of accounting. Marking to market means that the company s balance sheet shows loans and debt instruments at their fair value, which may be higher or lower than cost. Any profits or losses due to any change in value will go to the profit… …   Law dictionary

  • Mark-to-market — (auch Neubewertungsprozess genannt) bezeichnet eine in der Finanzwelt gebräuchliche Bewertungsmethode für den Wert einer Eigenhandelsposition oder eines Portfolios. Bei dieser Methode wird börsentäglich der Marktpreis für eine Position ermittelt… …   Deutsch Wikipedia

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  • mark-to-market — The IRS s practice of calculating gains and losses on open futures positions as of the end of the tax year. In other words, taxpayers open futures positions are marked to the market price as of the end of the tax year and taxes are assessed as if …   Financial and business terms

  • Mark-to-market — The process whereby the book value or collateral value of a security is adjusted to reflect current market value. The New York Times Financial Glossary * * * mark to market UK US noun [U] ACCOUNTING, FINANCE ► the rule that shares, etc. should be …   Financial and business terms

  • mark to market — The process of restating the carrying value of an asset or liability to equal its current market value. Under FAS 115, financial instruments held in trading accounts must be marked to market by increasing income to reflect unrealized gains or by… …   Financial and business terms

  • mark-to-market — noun Assigning a value to an asset equal to the current market price of the asset or one calculated based on related standardised assets for which there is a market …   Wiktionary

  • mark to market — verb To value an asset at its current actual or estimated market price …   Wiktionary

  • mark to market (to) —  Banking term for valuing assets at their market price …   American business jargon

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