Appreciation is a rise of a currency in a floating exchange rate.
In times of high inflation, appreciation will be common to all balance sheet assets. Generally, the term is reserved for property or, more specifically, land and buildings. In any viable modern economy, such property tends to increase in value over the years - if only because of the scarcity of usable land forces its price in a competitive situation. However, this belief has often caused speculative bubbles to arise.
There are considerable difficulties in assessing the increase in value of any particular asset. This is principally because of the variety of interpretations that can be attached to the word value itself and due to the various instruments and methods used in the valuation process.
See also
External links
- Yee, Kenton K., "Opportunities Knocking: Residual Income Valuation of an Adaptive Firm" . Journal of Accounting, Auditing and Finance, Vol. 15, No. 3, pp. 225-266, Summer 2000.
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Last updated on Thursday October 02, 2008 at 05:12:10 PDT (GMT -0700)
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