Mark-to-market pricing is widely used in modern finance, especially in financial derivatives and related fields. For example, the present value of a fund or portfolio is calculated by the market price of securities rather than the book value or cost price. The net value calculation of mutual funds is also the market value method, which is calculated and published by the custodian bank every day. Market valuation can also be used to measure the assets of other securities investment companies. For example, when the stock market rises, the net asset value of the insurance company will increase according to the market valuation. If the price-to-book ratio remains the same, its share price will rise.
In addition, in credit transactions, such as futures, foreign exchange and other derivatives transactions, the concept of market-oriented pricing is also very important. If the market-oriented assets of investors fall below the margin limit at a certain time, they may be required to close their positions or add margin.
Lehman sought the support of the state or other peers because its derivative assets were priced at market value, so no one was willing to help it (we will analyze various reasons carefully). In the end, it had no choice but to file for bankruptcy.