When Determining the Stock Price If a Firm Never Plans

question 105

Multiple Choice

When determining the stock price if a firm never plans to pay a dividend:

• A) then it cannot have value
• B) then there must be an expectation that the firm will distribute cash to the investors at some point in the future
• C) a very precise process is used that requires little in terms of future estimates of cash flows
• D) all of the above
• E) none of the above

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Definitions:

Long-Term Investments

Investments intended to be held for longer than a year, including stocks, bonds, or real estate, aimed at generating long-term returns.

Office Equipment

Office equipment consists of tangible property like desks, computers, and copiers that are used in an office setting for operations and administrative functions.

Financial Position

A snapshot of what a company owns (assets) and owes (liabilities) at a particular point in time, showing its net worth.

Property

Assets or possessions owned by an individual or company, comprising both tangible items, like buildings and land, and intangible items like patents or copyrights.