If the Price of a Stock Equals the Present Value

question 1

Multiple Choice

If the price of a stock equals the present value of expected future dividend payments, then when the firm expects losses in the future due to a downturn in the economy, we should expect that the price of the stock should:

• A) increase at a decreasing rate.
• B) stay constant.
• C) increase.
• D) decrease.

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Definitions:

Functional Relation

A connection between two variables such that changes in one variable systematically lead to changes in another, often used in the context of behavioral analysis.

Target Behavior

The particular behavior targeted for change through a behavioral intervention or plan.

Label Behavior

The act of categorizing or describing an individual's actions or characteristics based on observable behavior.

Consequences

Circumstances that change the environment shortly after a behavior is displayed and that affect the future performance of the behavior by serving to increase, decrease, or maintain it.