Equity Valuation Models Based on Dividends,cash Flows,and Earnings Have Been

question 27

Multiple Choice

Equity valuation models based on dividends,cash flows,and earnings have been the topic of many theoretical and empirical research studies in recent years.All of the following are true regarding these studies except:

• A) share prices in the capital markets generally correlate closely with share value
• B) share prices do not always equal share values
• C) temporary deviations of price from value occur
• D) unexpected changes in earnings, dividends, and cash flows do not correlate closely with changes in stock prices

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Definitions:

Classical Conditioning

The process of learning by continuously combining two stimuli; a response that first originates from the second stimulus ultimately originates from the first stimulus exclusively.

Operant Behavior

Conduct that is governed or impacted by its outcomes, such as incentives or sanctions.

Influences

Factors or agents that have an effect on the development, behavior, or decisions of individuals or systems.

Environment

Every nongenetic influence, from prenatal nutrition to the people and things around us.