What is the difference between market price and fundamental value (intrinsic value) of a stock?

Expert Solution

Market price of a stock is a price at which it 'is' trading on the stock exchange.

Intrinsic value of a stock is the price of the stock at which it 'should be' trading, analysts usually try to estimate the intrinsic value of the stock before investing as it gives them a true value of the stock.

If the intrinsic value of the stock is more than the market price, then the stock is considered to be undervalued and the analyst suggests to buy the stock.

If the intrinsic value of the stock is less than the market price, then the stock is considered to be overvalued and the analyst doesn's suggest to buy the stock.

jeff jeffy answered 1 year ago

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