Which of the Following Statements Is FALSE

question 94

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:

Defining Moments

Pivotal situations or decisions in a person’s life or career that significantly impact their future direction and personal narrative.

Displacement

An aggressive mechanism in which an individual directs his or her anger toward someone who is not the source of the conflict.

Bending Moments

A measure of the bending effect on an element due to external forces or moments applied to it, crucial in the design and analysis of structures.

Defense Mechanism

Psychological strategies used unconsciously by individuals to protect themselves from anxiety or to maintain a sense of self-esteem.