What does it mean to say that a stock is overvalued

Reference no: EM131021087

Jay Ritter, a professor at the University of Florida, was quoted in the Wall Street Journal as saying about Facebook: "It's entirely possible for a company to have solid growth prospects while its stock is overvalued."

a. What does it mean to say that a stock is "overvalued"?

b. Why might a firm's stock be overvalued despite the firm having "solid growth prospects"?

Source: Mark Hulbert, "A Year after Its Debut, Facebook Still Looks Overpriced," Wall Street Journal, May 17, 2013.

Reference no: EM131021087

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