In trading, the term “arm’s length price” denotes the price at which two unrelated parties would be willing to perform a securities transaction.
The term is used to make a distinction between the actual value of an asset and the value which that asset might have to specific parties.
For example, a company might have a distinct interest in selling its shares to a certain party at an exceptionally low price. The company may be required by law to sell the shares at a determined “arm’s length price” to prevent conflicts of interest with other shareholders.
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