Difference between fair value and intric value

Question

Accepted Answer

Fair value is the estimated worth of an asset or liability, while intrinsic value is the true underlying value of an asset or liability.

Fair value is determined based on market prices or valuation techniques, while intrinsic value is calculated based on fundamental analysis.
Fair value is used for financial reporting and accounting purposes, while intrinsic value is used for investment decision-making.
Fair value can fluctuate over time due to market conditions, while intrinsic value is considered more stable.
For example, the fair value of a stock may be higher than its intrinsic value if there is high demand in the market.
Intrinsic value takes into account factors such as future cash flows, growth prospects, and risk, while fair value focuses on current market conditions.

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