The Value of a Stock Is Based on the

question 7

Multiple Choice

The value of a stock is based on the

• A)present values of the dividend stream and final price.As a result,the value of a stock rises when interest rates rise.
• B)present values of the dividend stream and final price.As a result,the value of a stock falls when interest rates rise.
• C)future values of the dividend stream and final price.As a result,the value of a stock rises when interest rates rises.
• D)future values of the dividend stream and final price.As a result,the value of a stock falls when interest rates rise.

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Definitions:

Nondiscretionary Fiscal Policy

Government policies related to taxation and spending that automatically adjust without the need for explicit action by policy makers.

Legislative Changes

Modifications or alterations to existing laws enacted by a legislative body that can affect various sectors of the economy or society.

Budget Deficit

The financial situation in which a government's expenditures exceed its revenues within a specific period, leading to borrowing or debt accumulation.

MPC

The marginal propensity to consume, which measures the change in consumption resulting from a change in income.