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What should be the margin of safety if the amount of the discount below the fundamental...

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Finance

What should be the margin of safety if the amount of thediscount below the fundamental or intrinsic value? please use yourown words and no handwriting, thanks!

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The purpose of estimating intrinsic value is to take advantage of mispriced assets If the market value of an asset is below intrinsic value then the investor might consider owning the asset If the market value of an asset is above intrinsic value then the investor should choose to not own the asset The required margin of safety is the amount of discount below the intrinsic value an investor desires in order to purchase the asset A value investor searches for assets with the greatest margin of safety That means finding assets with a market price far below the investors perceived intrinsic value The degree of difficulty in estimating intrinsic value varies greatly among different assets For example the intrinsic value of a bond is easier to calculate than its corresponding equity stock A bond has set cash flow and set duration Therefore cash flow and growth are usually fixed The only variable is the amount the analyst chooses to discount the risks of the bond coupon interest not being paid and the cost of capital A stock has many more variables both tangible and intangible that can affect future cash flow growth and the discount for risk All things being equal    See Answer
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What should be the margin of safety if the amount of thediscount below the fundamental or intrinsic value? please use yourown words and no handwriting, thanks!

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