When a Firm's Announced Earnings Are Lower Than Expected, Investors

question 8

True/False

When a firm's announced earnings are lower than expected, investors will increase their valuation of the firm's future cash flows and its stock.

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Definitions:

Expected Dividend

The forecasted dividend payment announced by a corporation's board of directors to its shareholders.

Last Paid a Dividend

The most recent instance when a company distributed a portion of its earnings to shareholders in the form of dividends.

Required Rate of Return

The required rate of return is the minimum annual percentage earned by an investment that will entice individuals or companies to put money into a particular security or project.

Expected to Grow

Typically refers to a business or investment that is anticipated to increase in size, value, or income over time.