What does mispriced mean?
Mispriced means incorrectly priced. The term is especially common in finance and economics, where it describes a security, commodity, property, insurance policy, or other asset whose market price does not reflect its true value or appropriate risk. A mispriced asset may be overpriced because investors overestimate its prospects, or underpriced because they have failed to recognize its worth. The word can also apply more broadly when a product or service is sold for a price that does not correspond to its cost or value. In investment discussions, identifying mispriced assets can signal an opportunity to buy something too cheaply or sell something valued too highly. Its usefulness lies in distinguishing a price as a market fact from price as a fair reflection of value: something can cost a certain amount while still being mispriced if that amount is not warranted.
adjectiveIncorrectly priced; having a price that does not accurately reflect an item's true value, an appropriate market value, or the cost of providing it.
- Incorrectly priced, especially because the market price does not reflect an asset's true value or the cost of providing a good or service.
"The analyst argued that several of the company's shares were mispriced and were therefore likely to rise sharply."
"Investors bought the mispriced bonds after recognizing that their yields did not reflect the associated risks."
"The insurer discovered that its policies were mispriced and raised premiums to cover the actual cost of claims."
Markets reveal what something costs; mispriced asks whether its price reflects what it is truly worth.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Etymology of mispriced
Mispriced was formed by combining the prefix mis-, meaning wrongly or incorrectly, with the past participle of price. Price comes through Old French from Latin pretium, meaning price or value, and is the source of related words such as priceless and pricey. The prefixed form developed in modern English to describe something assigned an incorrect price, especially in economic and financial contexts.
Related word forms
How mispriced is actually used
Chiefly used in finance, economics, insurance, and markets, but it can also apply in general discussions of value. It may indicate either an excessive or an insufficient price, so the context must show which one is intended.
Easily confused with mispriced
A mispriced item has an incorrect price, whereas an unpriced item has no price attached to it.