IDEAS home Printed from https://ideas.repec.org/p/cde/cdewps/347.html
   My bibliography  Save this paper

Money-metric valuation of assets

Author

Listed:
  • Sudhir A. Shah

    (Department of Economics, Delhi School of Economics)

Abstract

We propose an asset’s money-metric value as the appropriate representation of its subjective value to an investor. This value is expressed in monetary terms and is invariant across equivalent utility representations of the investor’s preference. The ordering of money-metric values across assets matches the investor’s preference ordering over the assets.The money-metric value of a risky asset is inversely related to the investor’s risk aversion, while the money-metric value of a risk-free asset is uniform across preferences with comparable risk-aversion. Finally, an asset’s arbitrage-free market price is the sum of its money-metric value and the investor’s willingness-to-pay for fully de-risking the asset. JEL Code: G11, G12

Suggested Citation

  • Sudhir A. Shah, 2024. "Money-metric valuation of assets," Working papers 347, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:347
    as

    Download full text from publisher

    File URL: http://www.cdedse.org/pdf/work347.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    money-metric asset valuation; arbitrage-free prices; risk aversion;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cde:cdewps:347. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sanjeev Sharma (email available below). General contact details of provider: https://edirc.repec.org/data/cdudein.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.