We know that market is getting all of the prices wrong in the bubble because intrinsic value
Question:
We know that market is getting all of the prices wrong in the bubble because intrinsic value will be very low but market prices will be very high and there will be an environment of irrational exuberance and investors will be justifying higher prices because they will try to discount various types of impractical information in market.
The market is getting all the prices wrong in the bubble because markets will be trying to irrationally discount various informations which are not in line with the intrinsic valuations.
We will be using informations with respect to intrinsic value of the stock in order to understand the actual value of stock. The behavioural theory of Finance will also be applicable in case because it will reflect that markets are irrationally valuing stocks and Markets are not in line with intrinsic value so there is a likelihood of sharp crash or something like price correction to establish efficiency in the market and market price will fall in line with the intrinsic value.
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr