Which of the Following Statements Is FALSE

question 3

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:

Scale Models

Miniature representations of larger objects, often used for study, design, or as hobbies.

Medical Care

Services provided by healthcare professionals to prevent, diagnose, and treat illnesses, injuries, and other physical and mental impairments.

Medical Insurance

A form of insurance that covers the whole or part of the risk of a person incurring medical expenses.

Transductive Reasoning

A type of thinking typical in early childhood where children make inferences from specific instances to other specific instances.