The Valuation of Common Stock Is Considerably More Complicated Than

question 74

Multiple Choice

The valuation of common stock is considerably more complicated than the valuation of bonds or preferred stocks because:

• A)The returns can take two forms, i.e.annual cash payments and price appreciation
• B)Common stock dividends are normally expected to grow and not remain constant
• C)The returns from common stocks are generally larger and more certain than the returns from bonds and preferred stocks
• D)The returns can be in annual cash payments or price appreciation, and they are normally expected to grow and not remain constant

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Definitions:

Performance Criteria

Standards or benchmarks used to evaluate the effectiveness or success of a task, process, or individual’s performance.

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The main or only point of concentration or attention on a specific matter or activity.

Future of the Relationship

Possible outcomes and directions in which a relationship might develop over time.

Level of Trust

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