A marked-observed input value that is used in the calculation of an item’s fair value (FV). Quoted market prices are first choice for fair valuation, as such prices reflect the observable market prices obtained from an active market for an asset or a liability (or other items such as equity instrument/ quasi-equity) or identical/ nonidentical items (with specific adjustments).

For a liability or similar items, when a quoted price for the transfer of an identical or a similar liability or entity’s own equity instrument is not available (no published price is provided by a market player/ third-party vendor) and the identical item is held by another party as an asset, the fair value of the liability or equity instrument can be measured and considered from the perspective of a market participant that holds the identical item as an asset at the measurement date.

Fair value estimate can also be measured using unadjusted quoted prices in active market for identical assets or liabilities, or observable inputs other than readily available (direct) quoted prices, such as non-binding quoted prices for similar assets or liabilities in active markets, and quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable or validated by a source of observable market data.

Indirect (and hence adjustable) quoted prices  can be generally obtained from independent third-party brokers or dealers, including prices derived from model-based valuation techniques for which the key assumptions are observable in the market or validated by a source of observable market data. Quoted prices can be validated through price variance analysis, stale price review, subsequent sales testing, price comparison across market data publishers/ vendors and due diligence reviews of third-party vendors.

Inputs that have no observable sources (unobservable inputs) are supported by limited market activity, in any. These inputs require a great deal of management judgment.