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can i use vendor price (Bloomerg, IDC, PricingDirect, Reuters, S&P) in pricing the level 1 securities...

can i use vendor price (Bloomerg, IDC, PricingDirect, Reuters, S&P) in pricing the level 1 securities in the fair value hierarchy? what is the risk assessment?

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Answer #1

Yes, one can use the prices of level 1 securities which are present over various vendor pricing index like Bloomberg ,or Reuters or pricingdirect or Standard and Poor, because they are representing the truest value which is determined by the twin factors of demand and supply in the market with an appropriate volume and with the motivation to trade those security in order to find the truest value.

There may be certain risk because market are not completely efficient and they may be subject to insider trading and manipulation of books of accounts in order to commit various fraud and in order to inflate the share price.

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