Parity Price: A measurement of the purchasing power of a unit of a particular commodity. Originally, parity was the price per bushel, bale, pound, or hundredweight that would be necessary for a unit of a commodity today to buy the same quantity of other goods (from a standard list) that the commodity could have purchased in the 1910-14 base period. Under permanent law, prices of some commodities would be supported at 50 to 90% of parity through direct government purchases or nonrecourse loans. In 1948, the parity price formula was revised to make parity prices dependent on the relationship of farm and nonfarm prices during the most recent 10-year period for nonbasic commodities. Basic commodities, including wheat, corn, rice, peanuts, and cotton use the higher of the historical or the new formula.

 

Related Words

Parity Price: A measurement of the purchasing power of a unit of a particular commodity. Originally, parity was the price per bushel, bale, pound, or hundredweight that would be necessary for a unit of a . . . View Full Definition

Market Conversion Price: Also called conversion parity price, the price that an investor effectively pays for common stock by purchasing a convertible security and then exercising the conversion option. This price i . . . View Full Definition

Price Spread: An options strategy that involves buying and selling two options on the same security with the same expiration month, but with different exercise prices.

Price Support: Government intervention to set an artificially high price through the use of a price floor designed to aid producers.