Which of the Following Statements Is False

question 68

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:

Mnemonics

Memory aids or techniques that use patterns, associative imagery, or organizational systems to enhance the recall of information.

Retrograde Amnesia

The inability to recall events that happened or knowledge that was acquired prior to sustaining an injury or the start of a disease.

Psychogenic Amnesia

A memory disorder where an individual loses memory due to psychological stress or trauma, rather than physical damage to the brain.

Recognition Test

A memory test that asks individuals to identify previously learned information from a list of options.