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    Question

      A stock is selling at Rs 50. An analyst’s valuation model estimates its intrinsic value to be Rs 45. Based on her estimate, a stock is:

    A underpriced Correct Answer Incorrect Answer
    B overpriced Correct Answer Incorrect Answer
    C fairly priced Correct Answer Incorrect Answer
    D cannot say Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

      If the calculation of intrinsic value by an analyst shows that it is lesser than market value then it is overpriced. Intrinsic value is calculated as per the fundamentals of a company, if it shows a lesser value and share is trading at a higher value then it is overpriced.

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