MGT502 Handouts

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Financial Management - MGT201 Handouts.pdf

MGT201 - Financial Management Handouts

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@zaasmi said in MGT502 Handouts:

please explain intrinsic value with example

Answer: Intrinsic value/face value/par value is the actual value of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value.

Face value / par value refers to the stated value of the instrument at issuance. Market value, on the other hand, refers to the actual price investors pay for these securities. The par value is determined by the issuing entity and remains unchanged over time, but the market value is highly fluid and is dedicated by the psychology of the marketplace.

So par value of shares is the original value or the value that is determined at the time of issuance of shares while market value is the recent market price of shares in which shares can be bought/purchase.

Feel free to contact if there is something ambiguous.

[zaasmi]

please explain intrinsic value with example

[moaaz]

@zaasmi said in MGT502 Handouts:

it is about whole value at the end of financial period kindly explain it

Answer: If you buy a security which generates periodic profit then you have option to sell it now on market price or sell it in future. You are certain about market price of the security today but what should be its value after a year or 3 years. In financial there is mechanism to calculate the value of security after some future to equate now. This concept it tricky and will be dealt in coming lectures in details.

Hope you understand now

[zaasmi]

it is about whole value at the end of financial period kindly explain it