Using Present Value to Calculate Stock Prices Is ________ Than

question 163

Multiple Choice

Using present value to calculate stock prices is ________ than using present value to calculate bond prices because ________.

• A)less accurate; dividend payments for stocks are known with certainty but coupon payments for bonds are not
• B)less accurate; coupon payments for bonds are known with certainty but dividend payments for stocks are not
• C)more accurate; dividend payments for stocks are known with certainty but coupon payments for bonds are not
• D)more accurate; coupon payments for bonds are known with certainty but dividend payments for stocks are not

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Definitions:

Liability Increase

A financial situation where the obligations or debts of a person or company grow.

Personal-Use Asset

An asset primarily used for the personal enjoyment or needs of an individual or family, as opposed to business or investment use.

FMV

Fair Market Value (FMV) is the price that property would sell for on the open market, between a willing buyer and seller, with neither being under any pressure to buy or sell.

Date of Contribution

The specific day on which an asset or financial investment was contributed or transferred to a particular entity or project.