Which of the following statements regarding intrinsic value and market price is true?
A) If intrinsic value is greater than the current market price, the stock should be avoided or, if already held, sold since it is overvalued.
B) If intrinsic value is less than the current market price, the stock is undervalued and should be bought.
C) If intrinsic value is equal to the current market price, the stock is correctly valued and is in equilibrium.
D) If the intrinsic value is greater than the current market price, the stock is considered too speculative to be purchased.

Question

Quizplus · Accepted Answer

Intrinsic value is an estimate of the true value of a stock based on fundamental analysis. If the intrinsic value equals the market price, it suggests the stock is fairly valued, reflecting all known information and is in a state of equilibrium.

Which of the Following Statements Regarding Intrinsic Value and Market