Question

Stocks have market prices, and they also have intrinsic values. If the market price is below the intrinsic value as estimated by marginal investors, and if the intrinsic value remains stable in the future, then there will be a tendency for the stock's price to fall over time. True or false

Answer 1

True

Step-by-step explanation:

If the price of a stock drops suddenly, there is more supply than demand. People want out - and they usually want out for a reason.