Profit and Value of the Firm Are Two Concepts Which

question 48

Multiple Choice

Profit and value of the firm are two concepts which are:

• A)Unrelated because cash flow not profit is the main determinant of firm value
• B)Closely linked because the present value of a firm's expected future profits approximates to the market value of its securities
• C)Closely linked because dividends are paid out of profits and it is dividends that determine the market value of a firm's shares
• D)Closely linked because the market value of a firm is determined by its profits multiplied by the price-earnings ratio of its shares

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Definitions:

Treaty

A formal, ratified agreement between two or more sovereign states, usually in written form and governed by international law.

Civil Lawsuit

A court contention among several entities requesting either monetary compensation or a defined fulfillment, rather than facing criminal penalties.

Complaint

The initial legal document filed in a lawsuit outlining the plaintiff's claims against the defendant.

Petition

A formal written request, often signed by many people, appealing to authority with respect to a particular cause.