How does "fair value" differ from "market value"?

Fair value is a financial estimate that takes into account specific attributes of an asset, especially those that might not be reflected in a typical market scenario. It is often used in situations where an asset has a specialized use or particular characteristics, such as business operations, that affect its worth beyond typical buyer-seller transactions in an open market. This means that fair value can incorporate unique factors like the synergistic benefits of particular uses or regulatory influences that might apply to a specialized asset.

In contrast, market value is defined as the price that a property would sell for on the open market, assuming both buyer and seller are willing and informed participants. It's a more generalized valuation based on current market conditions and comparable sales without taking into account any individual circumstances or specialized uses.

The other options do not accurately capture the distinction between these two concepts. While it might be tempting to assert that market value is usually higher than fair value, this is not a universal truth and would be highly dependent on specific circumstances surrounding the asset being valued. Similarly, suggesting that fair value is predictive of future market trends misrepresents its actual nature, which is focused more on current and specific conditions rather than future projections. Lastly, the idea that the terms are synonymous is incorrect, as they have different