Which of the following statements is FALSE? Select one: O In recent years, an increasing number of firms have replaced dividend payouts with share repurchases. O The price of a share of stock is equal to the present value of the expected future dividends it will pay. O 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. The dividend discount model values the stock based on a forecast of the future dividends paid to shareholders, An investor might generate cash by choosing to sell the shares at some future date. O Fulture dividend payments and stock prices are not known with certainty: rather these values are based on the investor's expectations at the time the stock is purchased. O The dividend yield is the expected annual dividend of a stock, divided by its expected future sale price. In the dividend discount model, we implicitly assume that any cash paid out to the shareholders takes the form of a

Which of the following statements is FALSE? Select one: O In recent years, an increasing number of firms have replaced dividend payouts with share repurchases. O The price of a share of stock is equal to the present value of the expected future dividends it will pay. O 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. The dividend discount model values the stock based on a forecast of the future dividends paid to shareholders, An investor might generate cash by choosing to sell the shares at some future date. O Fulture dividend payments and stock prices are not known with certainty: rather these values are based on the investor's expectations at the time the stock is purchased. O The dividend yield is the expected annual dividend of a stock, divided by its expected future sale price. In the dividend discount model, we implicitly assume that any cash paid out to the shareholders takes the form of a

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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If the stocks are less risky than bonds, then the risk premium on stock may be zero. Assuming that the risk-free interest rate is 2 percent, the growth rate of dividends is 1 percent and the current level of dividends is $70, use the dividend-discount model to compute the level of the S&P 500 that is warranted by the fundamentals. Compare the result to the current S&P 500 level of 4300, and explain one possible reason for the difference.
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32. According to the stock valuation model, the sources of rising stock prices include the following factors except a. anticipation of high dividends in the future. b. lower interest rates. lower risk premium. d. All of the above are the sources of rising stock prices. C.
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A stock that does not pay a dividend must have a capital gains yield that is equal to the required return. Select one: True False
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No matter how the stock price fluctuates, as long as it can provide a positive return, the risk of investing in stocks is low.If the concept of standard deviation is applied, is this true or false?