A firm’s intrinsic value is an estimate of a stock’s “true” value based on accurate risk and
return data. It can be estimated but not measured precisely. A stock’s current price is its
market price—the value based on perceived but possibly incorrect information as seen by
the marginal investor. From these definitions, you can see that a stock’s “true” long-run
value is more closely related to its intrinsic value rather than its current price.