Equity Valuation Models Based on Dividends,cash Flows,and Earnings Have Been

question 10

Multiple Choice

Equity valuation models based on dividends,cash flows,and earnings have been the topic of many theoretical and empirical research studies in recent years.All of the following are true regarding these studies except:

• A) Share prices in the capital markets generally correlate closely with share value.
• B) Share prices do not always equal share values.
• C) Temporary deviations of price from value occur.
• D) Unexpected changes in earnings, dividends, and cash flows do not correlate closely
• With changes in stock prices.

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Definitions:

Ending Inventory

The total value of goods available for sale at the end of an accounting period.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company.

LIFO

A method of inventory valuation called "Last-In, First-Out," where the most recently acquired items are the first to be expensed.

Tax Advantage

A tax advantage refers to the economic bonus that applies to certain investments or transactions that are favored by tax policy, allowing for a reduction in tax liabilities.