The Current Share Price of a Corporation's Stock Is Determined

question 254

Multiple Choice

The current share price of a corporation's stock is determined by the

• A) original purchase price multiplied by 1 plus the interest rate.
• B) present value of capital gains and dividends received by stock owners.
• C) expected interest and dividend payments.
• D) expected capital gains and dividends prospective buyers will earn.

---

Definitions:

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows, reflecting the risk and time value of money.

Pension Expense

The cost recognized by an employer for maintaining a pension plan for its employees during a reporting period.

Pension Obligations

These are liabilities companies face for the pension benefits they have promised to pay their employees in the future.

Tax Law

Legislation and regulations governing how taxes are assessed, collected, and managed by governmental authorities.