What does behavioral finance suggest about asset pricing?

"People consistently pay reasonable prices for assets." "Markets always accurately reflect the true state of the economy." "Asset pricing is influenced by factors like demand and supply, not just economic fundamentals." "Investors are always rational in their decision-making."

What is the market value of a stock?

"The price at which a stock was initially offered to the public." "The price determined by a company's internal valuation." "The current price at which a stock is traded on an exchange." "The price calculated based on a company's assets and liabilities."

Which of the following factors influences the market value of a stock?

"The number of employees a company has." "The location of a company's headquarters." "The demand and supply dynamics of the stock." "The personal opinions of financial analysts."

What is the intrinsic value of a stock?

"The price a stock is expected to reach in the next year." "The price calculated using complex technical analysis indicators." "The fundamental value of a stock based on its financial performance and future prospects." "The price suggested by popular investment websites."

Why is intrinsic value considered important for investors?

"It helps determine if a stock is overpriced or underpriced." "It guarantees a specific return on investment." "It predicts short-term fluctuations in stock prices." "It reveals the exact date a company will become profitable."

What does a price-to-book ratio of 1 signify?

"The company is about to go bankrupt." "The stock is highly volatile and risky." "The market value and intrinsic value of the stock are aligned." "The company is experiencing rapid growth."

What type of analysis is crucial for short-term investment decisions?

"Fundamental analysis focusing on a company's long-term prospects." "Technical analysis to identify market trends and risks." "Sentiment analysis based on social media discussions." "Macroeconomic analysis of global economic factors."

Why is analyzing intrinsic value particularly important for investing in small and mid-cap companies?

"These companies always have higher growth potential." "These companies are immune to market fluctuations." "Investors may face a higher risk of falling into a value trap." "These companies are less regulated and riskier."