As a Holder of a Share of Common Stock, You

question 15

Multiple Choice

As a holder of a share of common stock, you are

• A) entitled to a portion of the firm's revenues.
• B) entitled to a portion of the firm's profits.
• C) entitled to a standard percentage return on your investment.
• D) responsible for the liabilities of the corporation.

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Definitions:

NPV

Net Present Value is a financial metric that calculates the present value of all net cash flows (positive and negative) from an investment, discounted back at the investor's required rate of return.

Required Return

The minimum expected return an investor demands for a particular investment, reflecting the investment's risk.

NPV

An alternative measure for Net Present Value, reflecting the difference in the present value of cash inflows and outflows over a period of time.

Required Rate

The minimum return that investors expect to earn from their investment, essentially setting a benchmark for the performance of an investment.