The Method of Valuing a Stock Based on the Present

question 32

Multiple Choice

The method of valuing a stock based on the present value of the future income derived from that stock is called:

• A)technical analysis.
• B)constant valuation.
• C)the basic stock valuation method.
• D)compound dividend analysis.
• E)the dividend discount model.

---

Definitions:

Exponential Notation

A mathematical way to write numbers using bases and exponents, often used to express very large or small numbers succinctly.

Arithmetic Operations

The basic operations in mathematics, which are addition, subtraction, multiplication, and division.

Compound Interest

A method of calculating interest where the interest is added to the principal so that, from that moment on, the interest that has been added also earns interest.

Exponential Decay

A process by which a quantity decreases at a rate proportional to its current value.