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The investors are NOT willing to buy or sell a stock when ………

A.the actual market price equals the intrinsic value
B.the actual market price is higher than the intrinsic value
C.the actual market price is lower than the intrinsic value
D.Both a and c are correct

User Asim Khan
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1 Answer

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Final answer:

Investors are generally not willing to buy or sell a stock when its market price exceeds its intrinsic value, and while it's typically true that sellers want to maximize their profits, various factors can lead them to sell goods below equilibrium price.

Step-by-step explanation:

The investors are not willing to buy or sell a stock when the actual market price is higher than the intrinsic value. The intrinsic value is what an investor perceives to be the true value of the stock based on all known factors, including the company's financial performance, future growth prospects, and the overall economic environment. When the market price exceeds this intrinsic value, the stock is considered overvalued, making it less attractive to investors who are seeking a good return on their investment.

Conversely, the statement is also false that "In the goods market, no seller would be willing to sell for less than the equilibrium price." This is because sellers may choose to sell at a lower price due to various factors such as the need to clear inventory, meet cash flow requirements, or respond to increased competition. In real-world scenarios, prices can fluctuate below the equilibrium price due to market dynamics, including buyer perceptions of quality, as influenced by price changes.

User Faraaz Kurawle
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