Using Present Value to Calculate Stock Prices Is ________ Than

question 163

Multiple Choice

Using present value to calculate stock prices is ________ than using present value to calculate bond prices because ________.

• A)less accurate; dividend payments for stocks are known with certainty but coupon payments for bonds are not
• B)less accurate; coupon payments for bonds are known with certainty but dividend payments for stocks are not
• C)more accurate; dividend payments for stocks are known with certainty but coupon payments for bonds are not
• D)more accurate; coupon payments for bonds are known with certainty but dividend payments for stocks are not

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Definitions:

Paid-In Capital

Paid-in capital is the amount of money that a company has received from shareholders in exchange for shares of stock.

Issuing Stock

The process by which a company raises capital by distributing shares of its ownership to investors.

Corporations

Business entities that are legally separate from their owners, providing limited liability protection to its shareholders.

United States

Refers to a country located primarily in North America, comprising 50 states and known for being a major political and economic power globally.