Do stocks have known and “provable” intrinsic values, or might different people reach different conclusions about intrinsic values? Explain.
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Do stocks have known and “provable” intrinsic values, or might different people reach different conclusions about intrinsic values? Explain.
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Here is a tip:
There is no single formula for determining intrinsic value.
Explanation
Intrinsic value is a core matrix that is used by analysts and investors to value a company. To calculate intrinsic value, an analyst estimates future cash flows and risk of the security based on his/her knowledge. This estimate can be different from analyst to analyst because of the information available and the methodology used to determine a fair value. That's why different people can have different intrinsic values.
Verified Answer
Intrinsic value is an estimated value of a stock based on future cash flows and risks. Different people can have different estimates of intrinsic values for the same stock.
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