Development and Finance from issue 2010/2

Iván Bélyácz - Kármen Kovács

Intrinsic Value: the Centre around which an Asset’s Market Value Revolves. The Significance of Intangible Assets in the Divergence of Intrinsic and Market Value

- Abstract -

JEL G-00


The intrinsic value of an asset is theoretical in nature; the market value might differ from the intrinsic value, but the convergence of the market value with the intrinsic value is ever-present. This can serve as the basis for the following rule in decision-making: if the intrinsic value of an asset is higher than the market value/price thereof, it is worth buying. The market value may temporarily differ from the asset’s own intrinsic value, but at the same time it also has to converge with it. When this convergence takes place, the rate of return on the market converges with the intrinsic rate of return of the asset. Market values are very often public and can be learnt for example in the form of equity market transaction prices. By contrast, the intrinsic value is usually considered as the private estimate of some measure, for example, by estimating the worth of an equity. The intrinsic value cannot be justified/defined. If ten analysts are asked about the value of a certain equity, they are likely to come to ten different estimates of the intrinsic value.

Iván Bélyácz, corresponding member of the Hungarian Academy of Sciences, professor of economics (University of Pécs, Faculty of Economic Sciences)
Kármen Kovács, PhD, assistant professor (University of Pécs, Faculty of Economic Sciences)

The purchase/download section of full articles is still under development. If you want to read full articles, please contact the editorial office of Fejlesztés és Finanszírozás/Development and Finance by sending an e-mail to Thank you for your understanding.