Fair market value refers to the price at which an asset, property, or business would be sold in the open market. The following conditions are also important in arriving at the fair market value: both the buyer and seller are acting in their own interest, without pressure, with the freedom to decide and mutually agree on price, have knowledge of relevant facts and a reasonable time to complete the transaction.

In case of shares or securities of a company, fair market value refers to their value (price) in the market.