Question

You are valuing the stock of Microsoft Corp. You estimate the fair value of the stock of $270. Currently the stock is trading at $244.37. Your recommendation should be:

Answer 1

Answer: buy the stock

Explanation:

Fair value refers to the price of an asset that's determined by the buyer and the seller. It's the worth of an asset. The market value is the price an an asset is sold in the marketplace.

By comparing the fair value and the market price, one can know if to invest in a asset or not. Since the fair value is more than the market price, then the should be bought.