Why is it more difficult to evaluate a share of common stock than it is to evaluate bonds? More than one answer may be correct. Multiple select question. Common stock cash flows are not known in advance. The rate of return required by the shareholders is not easily observed. Financial statements contain all the information related to bonds, but they do not provide any information related to common stock. The life of a bond is essentially forever, which makes it easy to evaluate a bond.
Why is it more difficult to evaluate a share of common stock than it is to evaluate bonds? More than one answer may be correct. Multiple select question. Common stock cash flows are not known in advance. The rate of return required by the shareholders is not easily observed. Financial statements contain all the information related to bonds, but they do not provide any information related to common stock. The life of a bond is essentially forever, which makes it easy to evaluate a bond.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Why is it more difficult to evaluate a share of common stock than it is to evaluate bonds? More than one answer may be correct.
Multiple select question.
Common stock cash flows are not known in advance.
The
Financial statements contain all the information related to bonds, but they do not provide any information related to common stock.
The life of a bond is essentially forever, which makes it easy to evaluate a bond.
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