Understanding the concept of "TRADABLE" will reveal a surprising answer to this question!
A few years ago, when I was still working as a quant for a big bank in London, my typical good morning question waiting for me in the office would be an abstruse sentence such as:
What is the fair price of a custom-made inflation bond convertible into equity that a client in Singapore would be interested in structuring and issuing?
The first thing I decided to do after I quit my good-paying job in 2009 and went home to prepare myself a cup of coffee and smoke a cigarette — smoking is bad for your health nevertheless! — was to pose myself a … much more difficult question:
"What is the fair price of one dollar?"
Read the rest of this article at What is the fair price of one dollar?