What is financial risk

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If I could ask one question it would be, "What would be the best way to understand if a stock is priced right or overpriced?" I ask this because, in the presentation of What is Financial Risk, he talks about a man paying $250,000 for a house that is listed at $200,000. It is easy to compare houses in the market and see if the house is priced right or if it is overpriced. For example, I live in Las Vegas, and the housing market is recovering, and houses are getting more and more expensive. My friend sold his house for $5,000 more than he was asking because the people understood the market and to get the house they would have to come in over asking price. They would still be able to get that extra $5,000 out of the house in the end. Stocks are a different story because all businesses are different, so you can not compare companies to each other. Just because a stock is listed for a certain price, does not mean it is worth it.

Reference no: EM131542079

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