Which of the Following Statements Best Describes the Concept Used

question 3

Multiple Choice

Which of the following statements best describes the concept used to value shares?

• A)The value of an infinite stream of dividends discounted by the current short-term interest rate assuming a company has an infinite life.
• B)Market price can be expressed as the present value of an infinite stream of dividends.
• C)The present value of the dividend stream and expected capital gain must be calculated separately and then added together.
• D)Market price can be expressed as the present value of an infinite stream of dividends assuming a company has an infinite life.

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Definitions:

Valid

Something that is logically sound, legally acceptable, or otherwise officially recognized as correct or legitimate.

Reliable

The quality of being consistently good in performance, accuracy, or honesty, engendering trust.

Sampling Bias

A statistical error that occurs when a sample is not representative of the population from which it is drawn, leading to skewed results.

Online Survey

A method of collecting data or feedback from a wide audience via the internet, using questionnaires or polls.