3. Intrinsic values and stock prices The intrinsic value of a company's stock, also known as its fundamental value, refers to the stock's "true" value based on accurate risk and return data. The value perceived by stock market investors determines the market price of a stock. A stock trading at a price below its intrinsic value is considered to be undervalued. A stock trading at a price above its intrinsic value is considered to be overvalued In a state of market equilibrium, the intrinsic value of the stock will be the market price of the stock. An analyst with a leading investment bank tracks the stock of Mandalays Inc. According to her estimations, the value of Mandalays Inc.'s stock should be $11.52 per share, but Mandalays Inc.'s stock is trading at $19.57 per share on the New York Stock Exchange (NYSE). Considering the analyst's expectations, the stock is currently