Which of the Following Statements Is FALSE

question 51

Multiple Choice

Which of the following statements is FALSE?

• A)The equity cost of capital for a stock is the expected return of other investments available in the market with equivalent risk to the firm's shares.
• B)The price of a share of stock is equal to the present value of the expected future dividends it will pay.
• C)If the current stock price were less than P₀ = ,it would be a negative NPV investment,and we would expect investors to rush in and sell it,driving down the stocks price.
• D)The law of one price implies that to value any security,we must determine the expected cash flows an investor will receive from owning it.

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Definitions:

Sufficient Information

Adequate and necessary data or knowledge required to understand a situation or make an informed decision.

Competitive Salaries

Describes compensation that aligns or exceeds the market rate for similar roles within an industry, aimed at attracting and retaining top talent.

Limited Resources

The condition of having finite assets, materials, or time available to accomplish a set of goals or tasks.

Traditional View

A perspective that is based on long-established beliefs, values, or practices within a culture or society.