Which of the Following Statements Regarding Perpetuities Is FALSE

question 48

Multiple Choice

Which of the following statements regarding perpetuities is FALSE?

• A)To find the value of a perpetuity one cash flow at a time would take forever.
• B)A perpetuity is a stream of equal cash flows that occurs at regular intervals and lasts forever.
• C)PV of a perpetuity =
• D)One example of a perpetuity is the British government bond called a consol.

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Definitions:

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders.

Common Stock Account

An equity account that represents the ownership interests of common shareholders in a corporation, reflecting the invested capital and retained earnings.

Reverse Stock Split

A reverse stock split is a consolidation of shares that decreases the total number of outstanding shares and increases the share price proportionately.

Market Value

The existing price for buying or selling an asset or service in the marketplace.