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Basic Question 6 of 13
In an efficient market, if an asset's intrinsic value is estimated to be $10 while the market price is $12, the asset appears to be ______.
B. undervalued
C. uncertain
A. overvalued
B. undervalued
C. uncertain
User Contributed Comments 2
| User | Comment |
|---|---|
| johntan1979 | But what if the intrinsic value estimation is wrong? Since in an efficient market, the price reflects all information available, then market price should be the real deal, no? |
| johntan1979 | Ok, ignore my comment. Just read that intrinsic is the real deal, the TRUE, ACTUAL value, no matter efficient or inefficient market. |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
Learning Outcome Statements
describe market efficiency and related concepts, including their importance to investment practitioners
contrast market value and intrinsic value
explain factors that affect a market's efficiency
CFA® 2024 Level I Curriculum, Volume 3, Module 3.