Mispricing: meaning, definitions and examples

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mispricing

 

[ mɪsˈpraɪsɪŋ ]

Noun
Context #1 | Noun

financial errors

Mispricing refers to the incorrect pricing of a security, financial instrument, or asset, often due to incorrect data, assumptions, or market inefficiencies. This phenomenon occurs when the market price of an asset diverges from its intrinsic value, leading to potential trading opportunities. It can also arise from fluctuations in market demand, trader behavior, or economic events.

Synonyms

error in pricing, misvaluation, pricing discrepancy.

Examples of usage

  • The mispricing of the stock led to significant losses.
  • Investors capitalized on the mispricing of the bond.
  • Analysts noted several instances of mispricing in the market.

Translations

Translations of the word "mispricing" in other languages:

🇵🇹 preço errado

🇮🇳 गलत मूल्यांकन

🇩🇪 Fehlbewertung

🇮🇩 penetapan harga yang salah

🇺🇦 недооцінка

🇵🇱 błędna wycena

🇯🇵 誤った価格設定

🇫🇷 erreur de prix

🇪🇸 valoración incorrecta

🇹🇷 yanlış fiyatlandırma

🇰🇷 잘못된 가격 책정

🇸🇦 تسعير خاطئ

🇨🇿 chybné ocenění

🇸🇰 nesprávne ocenenie

🇨🇳 错误定价

🇸🇮 napačna ocena

🇮🇸 röng verðlagning

🇰🇿 қате бағалау

🇬🇪 მორიგებული ფასები

🇦🇿 səhv qiymətləndirmə

🇲🇽 valoración incorrecta

Etymology

The term 'mispricing' is derived from the prefix 'mis-' which indicates an incorrect or erroneous act, combined with the word 'pricing', which refers to the process of determining the value or cost of a commodity, service, or asset. The roots of 'price' can be traced back to the Old French word 'priz', from the Latin term 'pretium', meaning 'value' or 'worth'. In the context of finance, the concept of mispricing emerged with the development of modern financial markets in the 20th century, especially in relation to the efficient market hypothesis, which suggests that asset prices reflect all available information. The recognition of mispricing has played a crucial role in trading strategies and risk management, as it highlights opportunities for profit in areas where pricing errors occur.