The Stock Price of a Firm Is Primarily a Reflection

question 252

Multiple Choice

The stock price of a firm is primarily a reflection of the

• A) firm's current net earnings per share.
• B) firm's expected future net earnings per share.
• C) discounted value of the firm's expected future net earnings per share.
• D) firm's current net earnings per share multiplied by the interest rate.
• E) book value of the firm.

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Definitions:

Nonrival

A characteristic of a good whereby one person's consumption does not prevent or decrease the ability of others to enjoy it as well.

Private Good

A product or service that is consumed by a single individual or household and cannot be used or consumed by others simultaneously.

Pizza

A popular Italian dish consisting of a usually round, flat base of leavened wheat-based dough topped with tomatoes, cheese, and often various other ingredients, which is then baked at a high temperature.

Nonexcludable Good

A type of good for which it is difficult or impossible to exclude individuals from using, typically leading to free-rider problems.