Will the current stock price increase by $1?
No, the current stock price will not increase by $1 because the future stock price is discounted by the required return. Suppose that a stock is expected to pay a $1 dividend at the end of this year and that your required return on equity investments is 9%.
Does expected sales price affect the current stock price?
1 In the generalized dividend model, if the expected sales price is in the distant future A) it does not affect the current stock price. B) it is more important than dividends in determining the current stock price. C) it is equally important with dividends in determining the current stock price.
How does a decrease in risk evaluation affect the stock price?
A decrease in the risk evaluation of the stock results to both an increase in the price of the stock and a decrease in the required rate of return on that stock. Suppose that the price a stock is bought for is $120.
What is the current stock price in the generalized dividend model?
1 In the generalized dividend model, the current stock price is the sum of A) the actual value of the future dividend stream. B) the present value of the future dividend stream. C) the present value of the future dividend stream plus the actual future sales price.
What increases the value of a stock?
If more people want to buy a stock (demand) than sell it (supply), then the price moves up. Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand, and the price would fall.
Why do stock prices change quizlet?
Stock prices change when traders buy and sell shares based on their view of the future prospects for the stock. The future prospects for the stock are influenced by unexpected news announcements. (new information)Efficient market reaction: The price instantaneously adjusts to, and fully reflects, new information.
What factors affect a stock's price quizlet?
if a demand for a stock is more than its supply, the share prices increases. if the sellers of a particular stock are more than its buyers, the share price decreases. if the company is earning much profit, share price will rise.
What determines stock price quizlet?
On the most fundamental level, supply and demand in the market determine stock price. Publicly reported earnings are the profits a company makes. This along with earning projections are major drivers of investor activity. You just studied 4 terms!
Which factors can affect a stock's price?
Factors that can affect stock pricesnews releases on earnings and profits, and future estimated earnings.announcement of dividends.introduction of a new product or a product recall.securing a new large contract.employee layoffs.anticipated takeover or merger.a change of management.accounting errors or scandals.
What are shares quizlet?
stock. a share of ownership in the assets and earnings of a business. stock certificate. the piece of paper a shareholder receives representing their ownership of a stock.
What stocks are on the market which best explains how the prices are set quizlet?
Once stocks are on the market, which best explains how their prices are set? Prices fluctuate on the basis of demand.
Which statement best describes stocks quizlet?
Which statement best describes stocks? They are an investment in a company's progress and profits.
How does a bull market affect a stock's price?
A bull market is typified by a sustained increase in prices. In the case of equity markets, a bull market denotes a rise in the prices of companies' shares. In such times, investors often have faith that the uptrend will continue over the long term.
Who determines the market price of a share of common stock?
The market price of a share of common stock is determined by: the board of directors of the firm.