The Value of Common Stock Today Depends On

question 76

Multiple Choice

The value of common stock today depends on:

• A) the expected future holding period and the discount rate.
• B) the expected future dividends and the capital gains.
• C) the expected future dividends, capital gains and the discount rate.
• D) the expected future holding period and capital gains.
• E) None of these.

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Definitions:

Relatively Elastic

Refers to a situation where the quantity demanded or supplied of a good changes significantly in response to changes in price.

Percentage Increase

calculates the rate at which a quantity grows over a period, expressed as a fraction of its original value.

Elastic

Describes a scenario where a small change in price leads to a large change in quantity demanded or supplied.

Inelastic

describes a situation where the demand or supply for a good is not significantly affected by changes in price.