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  • 6.

    Financial risk management objectives and policies (continued)

    • (e)

      Fair value

The fair values of financial assets and financial liabilities are determined as follows:

  • the fair values of listed available-for-sale investments and financial assets carried at FVTPL with standard terms and conditions and traded on active liquid markets are determined with reference to quoted closing prices.

  • the fair values of structured notes designated as at FVTPL and derivative financial instruments are determined using valuation provided by counterparty financial institutions and banks. For embedded derivatives in investment in convertible bonds, their fair values are determined based on the Binomial model using the assumptions that are supported by observable market data.

  • the fair values of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis using prices from observable current market transactions.

The Directors consider that the carrying amounts of the financial assets and financial liabilities recorded at amortised costs in the consolidated financial statements approximate their fair values.


Fair value measurements recognised in the consolidated statement of financial position

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

  • Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

  • Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

  • Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset

or liability that are not based on observable market data (unobservable inputs).

Annual Report 2010


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