The Value of a Stock Depends on the Ability of the Company

question 153

True/False

The value of a stock depends on the ability of the company to generate dividends and the expected price of the stock when the stockholder sells her shares.

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Definitions:

Amortization

The gradual reduction of a debt or the spreading of an intangible asset's cost over its useful life.

Depreciation Expense

The allocation of the cost of a tangible fixed asset over its useful life, reflecting the asset's consumption or wear and tear.

Book Value

The net value of a company's assets minus its liabilities, often used to evaluate the worth of a company.

Constant Percentage

A method or rate that remains unchanged over a specified period or under certain conditions.