In the context of market pricing, what does the term 'evaluated pricing' refer to?

Evaluated pricing refers to the methodology employed to determine the prices of non-traded instruments, which may include certain bonds, derivatives, or other financial products that do not have a robust market where they are actively bought and sold. In these cases, since there isn't a readily available market price for these instruments, professionals rely on valuation models that take into account various factors, such as comparable instruments' pricing, interest rates, market conditions, and specific characteristics of the instrument being evaluated. This approach allows for a more informed estimation of value, even in the absence of direct trading data.

The focus on using models distinguishes evaluated pricing from other pricing methods that rely on actual trades, consumer demand, or auction processes. Such methods, while valid for traded securities, do not apply to the evaluated pricing framework, which is crucial for accurately assessing the value of less liquid or non-tradable financial instruments.