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:

Long-Term Savings

Financial resources that are saved or invested with the intention of being used many years in the future, often for retirement or other significant life events.

Team-Based Incentives

Reward systems designed to motivate groups of employees to work together towards common goals and improve overall team performance.

Individual Incentive Systems

Programs designed to motivate and reward employees based on their personal performance or achievements.

Reward Distribution

The method or strategy used by an organization to allocate rewards among employees, often based on performance, seniority, or other criteria.