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This is in contrast to willingness to pay (WTP), which is the maximum amount of money a consumer (a buyer) is willing to sacrifice to purchase a good/service or avoid something undesirable. [1] The price of any transaction will thus be any point between a buyer's willingness to pay and a seller's willingness to accept; the net difference is the ...
In finance, the greater fool theory suggests that one can sometimes make money through speculation on overvalued assets — items with a purchase price drastically exceeding the intrinsic value — if those assets can later be resold at an even higher price. In this context, one "lesser fool" might pay for an overpriced asset, hoping that they ...
If more investors want a stock and are willing to pay more, the price will go up. If more investors are selling a stock and there are not enough buyers, the price will go down. [b] That does not explain how people decide the maximum price at which they are willing to buy or the minimum at which they are willing to sell.
When the price of a stock reaches a level that cannot be justified by even the best estimates of future business performance, it could be a good time to sell your shares.
If a management team is buying stock at any price, rather than at a good price, it may be wasting shareholder capital. So if a stock is really only worth $100 but a management team is buying it ...
According to the constructed preference view, consumer willingness to pay is a context-sensitive construct; that is, a consumer's WTP for a product depends on the concrete decision context. For example, consumers tend to be willing to pay more for a soft drink in a luxury hotel resort in comparison to a beach bar or a local retail store.
A short seller borrows stock from a broker and sells that into the market. Later the investor expects to repurchase the stock at a lower price, pocketing the difference between the sell and buy ...
Acquiring a controlling number of shares sometimes requires offering a premium over the current market price per share in order to induce existing shareholders to sell. It is made through a tender offer with specific terms, including the price. [2] Higher control premiums are often associated with classified boards. [3]: 165