{"id":1852,"date":"2019-09-27T13:33:00","date_gmt":"2019-09-27T13:33:00","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=1852"},"modified":"2026-03-11T12:19:40","modified_gmt":"2026-03-11T12:19:40","slug":"distinguishing-market-value-intrinsic-value","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/equity\/distinguishing-market-value-intrinsic-value\/","title":{"rendered":"Market Value vs. Intrinsic Value"},"content":{"rendered":"\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"QAPage\",\n  \"mainEntity\": {\n    \"@type\": \"Question\",\n    \"name\": \"If the intrinsic value of a stock is higher than its current market price, how is the stock classified?\",\n    \"text\": \"If you believe the per-share intrinsic value of Ford Motor Company (F) is $14.00 and it is currently selling at a market price of $12.75, you think the stock is:\\n\\nA. Overvalued\\nB. Fairly valued\\nC. Undervalued\",\n    \"answerCount\": 1,\n    \"acceptedAnswer\": {\n      \"@type\": \"Answer\",\n      \"text\": \"The correct answer is C. If the intrinsic value ($14.00) is higher than the current market price ($12.75), the stock is considered undervalued because it is trading below its estimated true value.\"\n    }\n  }\n}\n<\/script>\n<script type=\"application\/ld+json\">\n{\n  \"@context\": \"https:\/\/schema.org\",\n  \"@type\": \"VideoObject\",\n  \"name\": \"Market Efficiency (2025 Level I CFA\u00ae Exam \u2013 Equity \u2013 Module 3)\",\n  \"description\": \"This video lesson covers the foundational concepts in CFA Level I on financial systems. It explores the functions of financial markets, types of securities, financial intermediaries, investor positions, margin calculations, trading instructions, market structures, and regulation\u2014offering detailed explanations and calculations to support exam preparation and financial analysis skills.\",\n  \"uploadDate\": \"2022-05-10T00:00:00+00:00\",\n  \"thumbnailUrl\": \"https:\/\/img.youtube.com\/vi\/7Ub4Gt-0nMs\/maxresdefault.jpg\",\n  \"contentUrl\": \"https:\/\/www.youtube.com\/watch?v=7Ub4Gt-0nMs\",\n  \"embedUrl\": \"https:\/\/www.youtube.com\/embed\/7Ub4Gt-0nMs\",\n  \"duration\": \"PT1H5M44S\"\n}\n<\/script>\n\n\n\n<iframe loading=\"lazy\" width=\"560\" height=\"315\" src=\"https:\/\/www.youtube.com\/embed\/7Ub4Gt-0nMs?si=mw-xUUWqlVhEob90\" title=\"YouTube video player\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe>\n\n\n<p>The <b>market value<\/b> is the price at which an asset can currently be bought or sold. The <b>intrinsic value\/fundamental value<\/b> is the value placed on it by investors if they had a complete understanding of the asset\u2019s investment characteristics.<\/p>\n<p>In an efficient market, market values should be an accurate reflection of perceived intrinsic value. However, in relatively inefficient markets, significant discrepancies may exist between market and intrinsic value to the point that investors in these markets may attempt to calculate independent estimates of intrinsic value to test if assets are being undervalued or overvalued.<\/p>\n<blockquote>\n<h2><strong>Question<\/strong><\/h2>\n<p>If you believe the per-share intrinsic value of Ford Motor Company (F) is $14.00 and it is currently selling at a market price of $12.75, you think the stock is:<\/p>\n<ol style=\"list-style-type: upper-alpha;\">\n<li data-tadv-p=\"keep\">Overvalued.<\/li>\n<li data-tadv-p=\"keep\">Fairly valued.<\/li>\n<li data-tadv-p=\"keep\">Undervalued.<\/li>\n<\/ol>\n<p><strong>Solution<\/strong><\/p>\n<p>The correct answer is <strong>C<\/strong>.<\/p>\n<p>Due to your belief that Ford stock is worth $1.25\/share more than it is currently selling for, you believe that the stock is being undervalued by the market.<\/p>\n<\/blockquote>","protected":false},"excerpt":{"rendered":"<p>The market value is the price at which an asset can currently be bought or sold. The intrinsic value\/fundamental value is the value placed on it by investors if they had a complete understanding of the asset\u2019s investment characteristics. In&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8],"tags":[],"class_list":["post-1852","post","type-post","status-publish","format-standard","hentry","category-equity","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Tools of Fiscal Policy | CFA Level 1 - AnalystPrep<\/title>\n<meta name=\"description\" content=\"Learn about the key fiscal policy tools used by governments, including spending and revenue measures, and their economic impact.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/analystprep.com\/cfa-level-1-exam\/equity\/distinguishing-market-value-intrinsic-value\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Tools of Fiscal Policy | CFA Level 1 - 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