Meaning & use

intrinsic value

noun·Academictechnical

Last updated

UK/ɪnˌtrɪnsɪk ˈvæljuː/
US/ɪnˌtrɪnzɪk ˈvæljuː/

Meanings

  1. noununcountablefinance

    The real worth of something calculated from its own qualities or earnings, regardless of its current market price.

    Grammar: Often followed by of: the intrinsic value of a share.

    Patterns

    • the intrinsic value of something
    • above the intrinsic value

    The investor believed the shares traded below their intrinsic value.

    A gold coin has intrinsic value because of the metal it contains.

    Analysts estimate a company's intrinsic value from its future earnings.

  2. noununcountabletechnical

    The worth that something has in itself, not because it is useful for another purpose.

    Grammar: Used in ethics and everyday talk: things can have intrinsic value.

    Patterns

    • have intrinsic value
    • the intrinsic value of something

    Many people think nature has intrinsic value, not just usefulness.

    He argued that education has intrinsic value beyond getting a job.

Common combinations

estimate the intrinsic value
Analysts estimate the intrinsic value of each stock.
trade below intrinsic value
The shares trade below intrinsic value after the sell-off.
have intrinsic value
Old letters may have intrinsic value for the family.
intrinsic value of an option
The intrinsic value of an option is its profit if exercised now.
no intrinsic value
Paper money has no intrinsic value.

Synonyms and how they differ

inherent worth
Inherent worth is a more philosophical phrase and is not used for calculated asset values.
true value
True value is plainer and is less technical than intrinsic value, which has a defined meaning in finance.
fundamental value
Fundamental value is almost interchangeable in finance, but is less used in the philosophical sense.

Opposites

extrinsic valuemarket price

Word family

intrinsic adjective
belonging naturally to something
intrinsically adverb
in a way that belongs to the nature of something
value noun
how much something is worth
undervalue verb
to think something is worth less than it is

Commonly confused: intrinsic value or extrinsic value? intrinsic value or market value?

intrinsic value vs extrinsic value

Extrinsic value comes from outside factors such as demand or time, while intrinsic value belongs to the thing itself.

intrinsic value vs market value

Market value is the price buyers are paying now, which may be higher or lower than the intrinsic value.

Practice

An investor says a share is worth more than its price on the stock market. She is talking about its ___.

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