The Firm Foundation Theory is one of the important Investment Theories. It postulates that any financial asset like a stock or real estates like a piece of property has an intrinsic value. The condition in the market either keeps the price below the intrinsic value or above the intrinsic value - it rarely remains at or around the intrinsic value. This position offers the investor a choice - in case, he.she is able to buy the stock or the real estate below its intrinsic value, he/she shall make profits when the price goes above the intrinsic value.
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