Which of the Following Statements Is False

question 71

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 stock's 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.