CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

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 ______.

A. overvalued
B. undervalued
C. uncertain
Correct Answer: A

In such a market the market price should be very similar to the intrinsic value.

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.
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