Margin of safety
The gap between an estimate of a share's value and the price paid, giving room to be wrong without a large loss.
Margin of safety = (estimated value − price) ÷ estimated value. The more uncertain the valuation, the larger the margin needed. It reduces the chance and size of losses but does not guarantee against them, because value estimates can be wrong and values can fall.
Example
A share valued at ₹400 and bought at ₹300 has a margin of safety of 25%.
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