Meaning & use
intrinsic value
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Meanings
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.
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
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 ___.
Choose one answer.
Intrinsic value is the estimated true worth of an asset. Trading volume and market capitalization describe market activity, not underlying worth.
Make it your own
Write a sentence using “intrinsic value”, then check it and compare it with the examples above.