If the intrinsic value of stock is greater than the current stock price,the stock is overvalued and should be sold short.

Question

Quizplus · Accepted Answer

If the intrinsic value of a stock is greater than the current stock price, it indicates that the stock is undervalued and a good investment opportunity. Short selling is typically reserved for overvalued stocks, in which an investor sells borrowed shares with the expectation of buying them back at a lower price to profit from the difference. Therefore, if the intrinsic value is higher than the current stock price, it is not a signal to sell short, but rather to buy the stock.

If the Intrinsic Value of Stock Is Greater Than the Current