One of the basic premises of security analysis, and in particular fundamental analysis, is that
A) a stock's price is based on its past cash flows rather than on anticipated future cash flows.
B) market sectors do not move in concert with business cycles.
C) all securities have an intrinsic value that their market value will approach over time.
D) a security's risk has relatively little effect on the security's return.

Question

Quizplus · Accepted Answer

The basic premise of fundamental analysis is that every security has an intrinsic value, which is determined by its fundamentals, such as earnings, dividends, and growth prospects. Fundamental analysts believe that the market will eventually recognize this intrinsic value and adjust the security's price accordingly.

One of the Basic Premises of Security Analysis, and in Particular