What is a firm's intrinsic value Its current stock price Is the sock's "true long-run value" more closely related to its intrinsic value or to its current price
belongs to book: FUNDAMENTALS OF FINANCIAL MANAGEMENT|Eugene F.Brigham, Joel F. Houston|12th Edition| Chapter number:1| Question number:3
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A firm's intrinsic value is an estimate of a stock's "true" value based on accurate risk and return data. It can be estimated but not measured precisely. A stock's current price is its market price—the value based on perceived but possibly incorrect information as seen by the marginal investor. From these definitions, you can see that a stock's "true long-run value" is more closely related to its intrinsic value rather than its current price.
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