If a Company Is Expected to Earn $1 Per Share

question 44

Multiple Choice

If a company is expected to earn $1 per share this year and 2% more per share each subsequent year, the stock price in an efficient market will reflect

• A)the $1 per share, but ignore the 2% annual growth.
• B)neither of these pieces of information.
• C)the 2% annual growth but not the starting point of $1 per share.
• D)both of these pieces of information.

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Definitions:

Capital/Money

Financial assets or their financial value used to fund operations and investments in a business.

Entrepreneurship Stage

Describes a phase in the lifecycle of a new business venture, ranging from the idea conception to establishing the business and its eventual growth or closure.

Small Business Management

The ongoing process of owning and operating an established business.

Triggering Event

A specific occurrence that causes a process to start, or significantly impacts the course of an ongoing situation.