This article is a more detailed way to look at the statement that “Price is what you pay, value is what you get.”
What models exist to explain the value of a good ?
Spatial attributes have no best value. One example of a spacial attribute is thickness of a slice of bread or the colour of a jacket. Preference depends on the individual. In the financial world, the optimal amount of the debt/equity ratio is around 30-40% and varies from industry to industry. Picking out stocks with the lowest or highest debt to equity ratio result in substandard performance.
Hedonic attributes are values whereby the higher than better. An example is your PSLE t-score, why would anyone prefer 240 when he can get 270. In the finance world, I would reason that free cash flow yield is a hedonic attribute. A portfolio of stocks with the highest decile of FCF yield will