You would expect a stock _________________ when its intrinsic value is $26 and its stock market...
You would expect a stock _________________ when its intrinsic value is $26 and its stock market price is $28.50.
Multiple Choice
a)has a beta > 1
b)will generate a positive alpha
c)has a Tobin's q value < 1
d) has been overvalued.
Homework Answers
Answer is d) has been overvalued
Based on the statement above, the market price of the stock at $28 is higher than its intrinsic value of $26. This implies market is valuing the stock at a price which is higher than the value based on its fundamental principles and factors.
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