Explanation

Intrinsic value is a fundamental concept in security analysis that refers to the true underlying value of a security based on its investment characteristics, such as:

• Cash flows (dividends, interest payments, etc.)
• Growth prospects
• Risk profile
• Fundamental financial metrics (earnings, book value, etc.)

Let's analyze each option:

Option A: "the price at which the security can be bought or sold." - This describes the market price, not intrinsic value. Market price is what you actually pay or receive in transactions.

Option B: "represented by the intersection of supply and demand for the security." - This also describes market price. The intersection of supply and demand curves determines the current market price, which may or may not reflect intrinsic value.

Option C: "the value placed by investors based on a complete understanding of the security's investment characteristics." - CORRECT. This accurately describes intrinsic value as the estimated true worth of a security based on fundamental analysis of all relevant investment characteristics.

Key Distinction:

• Intrinsic value = What a security should be worth based on fundamentals
• Market price = What a security actually trades for in the market

When market price < intrinsic value, the security is considered undervalued (buying opportunity). When market price > intrinsic value, the security is considered overvalued (selling opportunity).

This concept is central to value investing and fundamental analysis approaches.