The Valuation Principle States That the Value of a Stock

question 21

True/False

The Valuation Principle states that the value of a stock is equal to the present value (PV) of both the dividends and future sale price of that stock which the investor will receive.

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Definitions:

Opportunity Cost

Giving up possible gains from several options by choosing a particular one.

Bowed Outward

A description of the shape of a curve on a graph, such as the production possibilities frontier, indicating increasing opportunity costs.

Opportunity Cost

The penalty of dismissing the closest superior alternative when engaging in the process of decision-making.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources, technology).