Which of the Following Factors Does Not Affect the Initial

question 116

Multiple Choice

Which of the following factors does not affect the initial market price of a share?

• A)the company's anticipated future profit
• B)the legal value of the share
• C)the current state of the economy
• D)the expected dividend rate per share

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Definitions:

Precommitments

Actions or commitments made in advance to strategically constrain one's future actions or choices, often used to achieve a desired outcome.

Utility Maximization

The principle that individuals or firms aim to achieve the highest level of satisfaction or benefit from their choices, given their resources.

Opportunity Cost

is the value of the best alternative forgone when a choice is made between competing options, representing the trade-offs associated with every decision.

Revenue Potential

The maximum amount of income that could be generated from a particular market or product, under ideal conditions.