Fair value hierarchy
A ranking of valuations by how reliable their source is: an exchange price, the price of a similar asset, or the company's own model.
How to read the number
The lower the level, the more of the company's own assumptions sit inside the number, and the more carefully it should be treated.
When the metric lies
Assets valued on an internal model are revalued through profit exactly like exchange-traded ones. In that case the profit is a consequence of revisiting assumptions.
Also known as: level 3 assets