In november 2006, Citigroups stock (NYSE:C) was trading at $49.59. Following the

Question

In november 2006, Citigroups stock (NYSE:C) was trading at $49.59. Following the credit crisis on 2007-2008 and by at the end of october 2009, Citigroup stock price has plummeted to $4,27 Several banks went under, adn the other saw their stock prices lose more than 60% of their value.

Based on your understandingof stock prices and intrinsic, values, which of teh follinw statements is true? 1. a stock's market price is often based on investors perceived risk in the company.

2. The intrinsic value of a stock is based only on perceived investor returns.

Explanation / Answer

1.) A Stock market's price is often based on investor's perceived risk in the company. True

2.) The intrinsic value of a stock is based only on perceived investor returns. False

Intrinsic value is based on the fundamentals of a company's financials and has nothing to do with what happened with Citigroup.

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