2005 Annual Report Julius Baer Holding Ltd. - GAM Holding AG

29 Financial instruments (continued)
For listed trading portfolio securities and financial investments as well as for exchange-traded derivatives and other financial instruments
whose prices are quoted in an active market, the fair value is determined directly from the quoted market prices.
For financial instruments for which quoted market prices are not directly available, fair values are estimated using valuation techniques
or models based wherever possible on assumptions supported by observable market prices or rates existing on the balance
sheet date. This is the case for the majority of OTC derivatives, most unlisted financial instruments, and other items that are not
traded in active markets.
For a small portion of financial instruments, neither quoted market prices nor valuation techniques or models based on observable
market prices are available for determining the fair value. In these cases, fair value is estimated indirectly using valuation techniques
or models based on reasonable assumptions reflecting market conditions.
The following valuation methods are used in determining the fair value of financial instruments carried at fair value as of 31 December
2005:
Determination of fair values from quoted market prices or valuation techniques
Notes
Valuation technique Valuation technique
market- non-market-
Quoted market price observable inputs observable inputs Total
CHF m CHF m CHF m CHF m
Trading portfolios 987.0 198.1 4.2 1189.3
Derivative financial instruments 614.0 718.2 4.3 1336.5
Financial investments 1090.5 5928.2 14.3 7033.0
Total assets 2691.5 6844.5 22.8 9558.8
Trading liabilities 39.6 365.6 27.2 432.4
Derivative financial instruments 617.0 773.6 4.3 1394.9
Financial liabilities designated at fair value - 1739.7 111.8 1851.5
Total liabilities 656.6 2878.9 143.3 3678.8
Sensitivity of fair values to changing significant assumptions to reasonably possible alternatives
For a small portion of financial instruments, the fair value is estimated using valuation techniques based on assumptions that are
not supported by observable market prices or rates. Julius Baer subjects the models used in these situations to a detailed internal
examination process before they are approved for use.
The potential effect of using reasonable alternative assumptions as inputs to valuation models from which the fair values of these
financial instruments are calculated has been determined to be negligible when using either less favorable assumptions or more
favorable assumptions.
JULIUS BAER GROUP 121