Suppose three honest individuals gave you their estimates of Stock X’s intrinsic value. Suppose three honest individuals gave you their estimates of Stock X’s intrinsic value analyst with an excellent reputation on Wall Street, and the third person is Company X’s CFO. If the three estimates differed, in which one would you have the most confidence? Why?
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Remember that intrinsic value is the true value of the firm which investors should expect if they have all the information about the firm's risk and return. In this case, you would have the most confidence in the CFO, since a firm's managers or executives have better access to such information than outside investors like your roommate or the Wall Street analyst.
But do take note that those values are only estimates and is not necessarily right nor a guarantee of what the future price will be.
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