Intrinsic Value

An asset’s value is determined by its intrinsic value. This metric is determined using an intricate financial model or an objective computation. The intrinsic value of an asset is distinct from its present market value. Investors can determine if an asset is overpriced or undervalued by comparing it to its current price.

Cash flow is used in financial analysis to ascertain a company’s or stock’s intrinsic, or underlying, worth. The difference between the option’s strike price and the underlying asset’s current market price is known as the intrinsic value in the pricing of options.