Define: Intrinsic Value

UK Accounting Glossary

Definition: Intrinsic Value



Advertisement



Full Definition of Intrinsic Value


The actual value of a security, as opposed to its market or book value, is the intrinsic value of the security. Intrinsic value may differ from market value because of brand names, patents and other intangibles that are difficult for investors to quantify. There are various approaches but no standard formula for calculating the intrinsic value of an asset. The concept of intrinsic value is also used in options trading where intrinsic value measures the amount by which the option is in the money. A call option’s intrinsic value is calculated by subtracting the strike price of the call option from the market price of the underlying security. A put option’s intrinsic value is measured by subtracting the market price of the underlying security from the strike price of the put option.


Advertisement




Cite Term


To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
https://payrollheaven.com/define/intrinsic-value/
Modern Language Association (MLA):
Intrinsic Value. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. February 21, 2020 https://payrollheaven.com/define/intrinsic-value/.
Chicago Manual of Style (CMS):
Intrinsic Value. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/intrinsic-value/ (accessed: February 21, 2020).
American Psychological Association (APA):
Intrinsic Value. PayrollHeaven.com. Retrieved February 21, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/intrinsic-value/

Definition Sources


Definitions for Intrinsic Value are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February 2020.