Answer
The fair value hierarchy includes three levels. The first level contains quoted prices for identical assets/liabilities therefore this level is the least subjective level that only uses observable inputs. The second level allows other inputs that are also observable. The third level contains the unobservable inputs making this level the most subjective.
Work Step by Step
The first and second levels of the fair value hierarchy use observable inputs while the third and final level uses unobservable inputs making it the most subjective.
