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What Is "Fair Value?"

 



A stock’s fair value, synonymous with intrinsic value, fair price, or target price, is a measurement for the true value
that a stock is worth.  The fair value is estimated with the firm's underlying fundamentals.  A common form of the
valuation process is the discounted future cash flow.  A stock's market price is not necessarily equal to its fair value.  The difference between the market price and the fair value is the pricing error.