A stock's market price would equal its intrinsic value if all investors had all the information that is available about the stock. In this case the stock's market price would equal its intrinsic value.

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Business

Drake Savage

22 November, 19:43

A stock's market price would equal its intrinsic value if all investors had all the information that is available about the stock. In this case the stock's market price would equal its intrinsic value.

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Hendrix · Answer 1

True. A stock's market price would equal it's intrinsic value if all the investors had all the information about the stock.

Explanation:

Intrinsic value is different from market value in the sense intrinsic value is derived by subtracting all assets from all liabilities of a company.

Intrinsic value is equal to market value + / - investor's sentiments

Market price of a share is usually derived by dividing total market capitalization by no of shares/stock outstanding. It refers to the value at which a company's stock is currently trading in the stock market.

As efficient market theory holds, investor decisions are affected by the information about a stock which gets circulated. This wipes out any arbitrage possibilities.

A stock's market price would equal it's intrinsic value if all investors had all the information that is available about the stock.

Thus, the given statement is true.