Question

Should managers focus directly on the stock’s actual market price or its intrinsic value, or are both important? Explain.

Answer 1

Managers should focus on maximization of Intrinsic value of the stock.

Since intrinsic value is a long term plan while market price is current thing. So manager work with the long term share holder wealth maximization plan. therefore increasing the intrinsic value should be main focus for the manger and not the market price..

Because if intrinsic value increase and price is still down investor will buy the stock in bulk and price will automatically increase.