Saturday, July 24, 2010

Intrinsic Value

Basically, intrinsic value of a company / asset is the estimate of the true underlying value of the company / asset based on fundamental analysis. It's usually calculated using the discounted cash flow model and / or valuation of the underlying net asset (all valuable assets such as cash, deposits and good properties, less all borrowings). Usually this value is different from the company / asset's market value as the market value is depending on market sentiments (aka mood swings).

Reference:
  1. Investopedia - Intrinsic Value
  2. Wikipedia - Intrinsic Value 
Do let me know if there's anything I can do to simplify the explanation further. Let us all improve together. :)

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