ABC Company Stock Currently Has a Market Value Equivalent to Its

question 95

Multiple Choice

ABC Company stock currently has a market value equivalent to its intrinsic value. Marco perceives that ABC Company is increasing its level of risk and therefore Marco increases his required rate of return on ABC stock. This change in the required rate of return

• A) will reduce the intrinsic value of ABC stock to Marco.
• B) will increase the intrinsic value of ABC stock to Marco.
• C) will change the intrinsic value but the direction of the change cannot be determined.
• D) is a signal to Marco that he should buy more ABC Company stock.

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Definitions:

Noam Chomsky

An influential linguist, philosopher, and cognitive scientist known for his theory of generative grammar and critique of behaviorism.

Socioeconomic Status

A measure of an individual's or family's economic and social position in relation to others, based on income, education, and occupation.

Language Use

The manner in which words and phrases are selected and applied to communicate effectively in various contexts.

Varied Language

The use of diverse vocabulary and sentence structures to enrich communication and typically to engage a broader audience.