What Is the Difference between a ‘Quoted Price’ and a Market maker’S’theoretical Fair Value’?

The quoted price is the publicly displayed bid or ask price at which a market maker is willing to transact. The theoretical fair value is the market maker's internal, model-derived estimate of the asset's true value, often the midpoint of their quotes.

The quoted price is always a deviation from the fair value, with the spread existing to cover the market maker's costs and risk, such as adverse selection, inventory holding, and order processing.