Intrinsic Value Greater than Market Value

C

When the intrinsic value of a stock is greater than its market value, it means that the stock is currently undervalued by the market. The intrinsic value of a stock is an estimate of its true value based on factors such as the company's financial health, its earnings potential, and the broader economic and market conditions.

In contrast, the market value of a stock is the price at which it is currently trading in the market. If the intrinsic value of a stock is higher than its market value, it suggests that the market is not fully recognizing the true worth of the company, and therefore, the stock is potentially a good investment opportunity.

Option C, "The market is undervaluing the stock," is the correct answer. This statement is consistent with the concept of intrinsic value and suggests that the stock is currently undervalued by the market.

Option A, "The stock has a low level of risk," cannot be inferred from the given information. The intrinsic value of a stock is not necessarily an indicator of its risk level.

Option B, "The stock offers a high dividend payout ratio," is also not necessarily true. The intrinsic value of a stock is not directly related to its dividend payout ratio.

Option D, "The market is overvaluing the stock," is incorrect since the intrinsic value of the stock is greater than its market value. If the market were overvaluing the stock, the market value would be greater than its intrinsic value.