The Share Prices of a Corporation _____

question 96

Multiple Choice

The share prices of a corporation _____

• A)are inversely proportional to the profits earned by the corporation.
• B)are decided by its board of directors.
• C)are decided at the start of every trading day by the Securities and Exchange Commission in the United States.
• D)reflect the present value of the discounted stream of expected profit.
• E)reflect the present value of the corporation's rate of investment.

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Definitions:

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, making them more affordable to small investors.

Shares

Shares represent units of ownership interest in a corporation or financial asset, providing shareholders with a proportion of the company's profits and a claim on assets.

Earnings Per Share

A financial metric calculated as a company's net income divided by the number of outstanding shares, indicating the profitability per share.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, typically with fixed dividends.