Equity Valuation Models Based on Dividends,cash Flows,and Earnings Have Been

question 27

Multiple Choice

Equity valuation models based on dividends,cash flows,and earnings have been the topic of many theoretical and empirical research studies in recent years.All of the following are true regarding these studies except:

• A) share prices in the capital markets generally correlate closely with share value
• B) share prices do not always equal share values
• C) temporary deviations of price from value occur
• D) unexpected changes in earnings, dividends, and cash flows do not correlate closely with changes in stock prices

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Definitions:

Analysis of Variance

A statistical method used to compare three or more samples means by analyzing their variances.

F-statistic

A ratio used in statistical analysis to determine if there are significant differences between group means in a dataset, typically in ANOVA tests.

Null Hypothesis

A default hypothesis that there is no effect or no difference, and any observed difference is due to sampling or experimental error.

Confidence Interval

A range of values that is used to estimate the true value of a population parameter with a certain degree of confidence.