Saturday, 10 March 2012

The quantity of value is an estimate or approximation. Intrinsic value can be quantified as Net Present Value (NPV) based on Discounted Cash Flow (DCF) analysis.

The quantity of value is an estimate or approximation. The estimated quantity of value is based on an appraisal or a valuation. It can be expressed either as 

  • an interval estimate or 
  • a range of quantitative values, or 
  • as a single-point estimate or 
  • a single quantity of varying precision. 
Either way, intrinsic value can be quantified as Net Present Value (NPV) based on Discounted Cash Flow (DCF) analysis.

Price is not value, neither in concept nor in quantity. Price is a market-generated quantity. 

  • The confusing term "market value" is really market price. 
  • The confusing term "fair market value" is really fair market price. 
  • The fair market price is the price that equals the single quantity that best approximates investment value. 
The best point estimate of investment value is the mean of the distribution of values rather than the median of the distribution of values or the midpoint of the range of values.

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