Which of the Following Statements Is FALSE

question 34

Multiple Choice

Which of the following statements is FALSE?

• A)An investor will be willing to pay up to the point at which the current price of a share of stock equals the present value of the expected future dividends and the expected future sale price.
• B)The expected total return of a stock should equal the expected return of other investments available in the market with equivalent risk.
• C)The total amount received in dividends and from selling the stock will depend on the investor's investment horizon.
• D)If the current stock price were greater than P₀ = ,it would be a positive NPV investment,and we would expect investors to rush in and buy it,driving up the stocks price.

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Definitions:

CCA Class

Stands for Capital Cost Allowance Class, which is a categorization used in Canadian tax law for the purpose of calculating depreciation for tax purposes.

Borrowed Money

Funds that are loaned to an individual or business with an obligation to repay the amount plus interest.

Operating Lease

A lease agreement allowing the use of an asset without ownership, typically involving shorter-term rentals.

Residual Value

The estimated value that an asset will have at the end of its useful life.