Clearwire 2007 Annual Report Download - page 55

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investments where we use models to estimate fair value in the absence of quoted market prices, we often utilize
certain assumptions that market participants would use in pricing the investment, including assumptions about risk
and or the risks inherent in the inputs to the valuation technique. These inputs are readily observable, market
corroborated, or unobservable Company inputs.
We estimated the fair value of securities without quoted market prices using internally generated pricing
models that require various inputs and assumptions. We believe that our pricing models, inputs and assumptions are
what market participants would use in pricing the securities. We maximize the use of observable inputs to the
pricing models where quoted market prices from securities and derivatives exchanges are available and reliable. We
typically receive external valuation information for U.S. Treasuries, other U.S. Government and Agency securities,
as well as certain corporate debt securities, money market funds and certificates of deposit. We also use certain
unobservable inputs that cannot be validated by reference to a readily observable market or exchange data and rely,
to a certain extent, on management’s own assumptions about the assumptions that market participants would use in
pricing the security. Our internally generated pricing models may include our own data and require us to use our
judgment in interpreting relevant market data, matters of uncertainty and matters that are inherently subjective in
nature. We use many factors that are necessary to estimate market values, including, interest rates, market risks,
market spreads, and timing of cash flows, market liquidity, and review of underlying collateral and principal,
interest and dividend payments. The use of different judgments and assumptions could result in different
presentations of pricing and security prices could change significantly based on market conditions.
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