Which of the Following Statements Is FALSE

question 75

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:

Deciles

Divisions of a dataset into ten equal parts, where each part represents 10% of the data’s distribution.

Quartiles

Values that divide a list of numbers into quarters, providing a summary measure of the spread of the values.

Observations

The act of collecting data points or specific measurements from experiments, studies, or real-life occurrences.

Data Set

A collection of related sets of information, often consisting of numbers, text, or symbols, typically organized for analysis.