A security's intrinsic value is the price that reflects investors' estimates of the value of the cash flows they expect to receive in the future.

Question

Quizplus · Accepted Answer

This statement is true. Intrinsic value is a fundamental concept in finance that measures the true or inherent worth of an asset, such as a stock or a bond. It is based on the cash flows or earnings potential of the asset, as well as other factors such as interest rates, economic conditions, competition, and risk. Investors use intrinsic value as a benchmark to decide whether to buy or sell an asset, and to compare its price to its true value.

A Security's Intrinsic Value Is the Price That Reflects Investors