Question

Does the process of discovering the intrinsic price allow for better returns? In your answer you...

Does the process of discovering the intrinsic price allow for better returns?

In your answer you can compare intrinsic valuation with market valuation and/or relative valuation.

Homework Answers

Answer #1


The process of discovering intrinsic price allows us to know the current market position of an asset. It is the value of an asset which is different from the market valuation that is listed on stock market.

It can be said that the process of discovering the intrinsic price only allows us better understanding about the asset not that discovering the intrinsic price would allow us better returns.
Returns are based only on the market price and cannot be changed.

  1. Comparing intrinsic valuation with market valuation and/or relative valuation would give us the information about the actual performance and makert image.
  2. Market valuation is based on the current stock price of the company whereas intrinsic valuation gives us the actual performance.
  3. Such comparison between intrinsic valuation and market valuation gives investors an extra edge to decide whether to invest or not.
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