Stock value

Definition

Stock value represents the current market price of a share of stock. It reflects the collective perception of the company's worth by investors based on factors like earnings, growth potential, and risk.

5 Must Know Facts For Your Next Test

1. Stock value can be influenced by both internal factors (like company performance) and external factors (like economic conditions).
2. The price-to-earnings (P/E) ratio is a common metric used to evaluate stock value.
3. Dividend Discount Model (DDM) is one method for calculating the intrinsic value of a stock.
4. Market efficiency theory suggests that stock prices fully reflect all available information.
5. Stock value may fluctuate due to investor sentiment, news events, and changes in market conditions.

Review Questions

• What are some internal and external factors that influence stock value?
• How does the Dividend Discount Model help in determining stock value?
• What role does market efficiency play in affecting stock prices?

Related terms

Intrinsic Value: The perceived or calculated true value of an asset based on fundamental analysis.

Price-to-Earnings Ratio: A valuation ratio of a company's current share price compared to its per-share earnings.

Dividend Discount Model: A method used to estimate the value of a company's stock by predicting future dividends and discounting them back to present value.