Common Stocks Are Difficult to Value for All the Following

question 56

Multiple Choice

Common stocks are difficult to value for all the following reasons EXCEPT

• A) cash flows are not known.
• B) the rate of return required by the market is difficult to establish.
• C) the Board of Directors changes periodically.
• D) the life of the investment is essentially forever.

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Definitions:

Rectangular Playing Field

A flat area of land designated for sports or games, with a length typically greater than its width, bounded by straight edges at right angles.

Square Meters

A unit of area measurement in the metric system, equivalent to the area of a square with sides one meter in length.

Horizontal Asymptote

A line that a graph approaches but never touches as the inputs grow large in magnitude.

\(g(x)\)

Represents a function named g that is dependent on a variable x.