Applying the Valuation Procedure to Ordinary Shares Is More Difficult

question 57

Multiple Choice

Applying the valuation procedure to ordinary shares is more difficult than applying it to bonds because:

• A) the size and timing of the dividend cash flows are less certain.
• B) ordinary shares have no final maturity date.
• C) the rate of return on ordinary shares is not directly observable.
• D) All of the above are true.

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Definitions:

Oxygen Atoms

the basic unit of the element oxygen, essential for combustion, respiration, and various other chemical reactions.

Light Colored

Referring to materials or objects that have low absorption of light, typically reflecting most wavelengths of light visible to human eyes.

Transparent

A material's ability to allow light to pass through it so that objects behind can be distinctly seen.

Hardness

A measure of how resistant a material is to deformation, scratching, or penetration.