- A loss generated through an accounting entry rather than the actual sale of a security. Mark-to-market losses can occur when financial instruments held are valued at the current market value. If a security was purchased at a certain price and the market price later fell, the holder would have an unrealized loss, and marking the security down to the new market price results in the mark-to-market loss. Mark-to-market accounting is part of the concept of fair-value accounting which attempts to give investors more transparent and relevant information.
For example, if a company holds securities that they bought as an investment and the market value of the securities fall, then once they assign the new market value to their asset they would take a mark-to-market loss on their holding even if they didn't sell it. Mark-to-market attempts to give investors a more accurate picture of the value of a company's assets.
Investment dictionary. Academic. 2012.
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