These both appear similar can someone help to enlighten?
Investment Value is said to be an individual investor’s computed value of an investment with their own adjustments.
However Intrinsic value is afterall also a computed value.
How are both different and I’m asking this as there are practice questions asking about this thanks!
Let me juxtapose this with another example.
Imagine you are selling a private company to a publicly listed giant and you also have an option to sell the private company to another private company.
Will they come out with around the same value?
The answer is NO, because for a publicly listed firm, the marginal investors do not care about firm specific risks as they are well diversified where as the investors in private companies are generally not diversifed and they would consider all of the risks ( both market and firm specific).
In a similar manner, for a particular investor, the value would be very different based on how diversified he or she is and his out put would be different than the intrinsic value of the firm. We call it investment value
You compute both of them but the particulat investor will customize it, make some changes based on his risk and return perspective