Authors: Elton G. McGoun
Addresses: William H. Dunkak Professor of Finance, Department of Management, Bucknell University, Lewisburg, Pennsylvania 17837, USA
Abstract: This paper identifies three |folk| arguments for an intrinsic value implicit in the finance literature. The |hindsight| argument states that if financial assets eventually have a value in the form of realised cash flows, then this reveals an intrinsic value that was always there. The |Goldilocks| argument states that if there are values that are clearly too high and too low, there must be an intrinsic value between the two that is just right. The |time-will-tell| argument states that however unstable prices may be in the short-run, in the long-run we can infer an intrinsic value beneath them.
Keywords: intrinsic value; paradox; valuation; philosophy; behavioural finance; art market; financial markets.
International Journal of Monetary Economics and Finance, 2007 Vol.1 No.1, pp.45 - 56
Published online: 02 Dec 2007 *Full-text access for editors Access for subscribers Purchase this article Comment on this article