An example of how an asset might be valued...
"The financial institution that owns the [mortgage backed] bond calculates the value at 97 cents on the dollar, or a mere 3 percent loss. But S.& P. estimates it is worth 87 cents, based on the current loan-default rate, and could be worth 53 cents under a bleaker situation that contemplates a doubling of defaults. But even that might be optimistic, because the bond traded recently for just 38 cents on the dollar, reflecting the even gloomier outlook of investors."
So, which price should the government pay (or guarantee) if it opts to buy (or guarantee) loans from banks?
Source of quote: http://www.nytimes.com/2009/02/02/business/economy/02value.html?th&emc=th
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