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    Question

    If the intrinsic value of a share is less than the

    market price, which of the following is most reasonable to assume?
    A That shares have lesser degree of risk Correct Answer Incorrect Answer
    B That the company is high dividend paying Correct Answer Incorrect Answer
    C That market is undervaluing the share Correct Answer Incorrect Answer
    D That market is over valuing the shares Correct Answer Incorrect Answer
    E That the market is rightly valuing the shares Correct Answer Incorrect Answer

    Solution

    A higher market price than the intrinsic value means that the market is assigning more value than is the actual worth and hence it is overvaluing it. 

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