Why Is It Difficult to Determine the Market Price of a Private

question 44

Multiple Choice

Why is it difficult to determine the market price of a private corporation's shares at any point in time?

• A) It is difficult to obtain enough information to accurately value such a company.
• B) The price of its shares is fixed by the owners.
• C) It has a limited number of owners.
• D) There is no organized market for its shares.

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Definitions:

Loan Agreement

A contract between a borrower and a lender outlining the terms and conditions of a loan.

Excess Funds

Financial resources that exceed the current needs or obligations of a company or individual, available for investment or other purposes.

Short-Term Financial Plan

A financial strategy or planning document that outlines the revenue, expenses, and cash flow for a business over a short period, typically less than one year.

Letter of Credit

A financial document issued by a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount.