Siddharth (s) (87 Points)
22 July 2010When the actual forward price is greater than the fair forward price we say stock is overvalued in the forward market... In this case we adopt the strategy to Buying in Spot market and selling in Forward market....
Now my Question is in this situation can i say that Stock is undervalued in "spot market".... ???????
Please clarify......
Krunal Raichura
(Financial Advisory)
(2134 Points)
Replied 22 July 2010
“Common sense is the heart of investing and business management. Yet the paradox of common sense is that it is so uncommon. For example, people often refer to a stock or the market level as either “overvalued” or “undervalued.” That is an empty statement. A share of stock or the aggregate of all shares in a market index have an intrinsic value, which is the sum of all future cash flows the share or the index will generate in the future, discounted to present value.
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