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Posted by on Thursday, October 18, 2007 at 5:54am.

Can u please help me on this:
High cash flow is generally associated with a higher share price whereas higher risk tends to result in a lower share price.
is it true of false?? and why

thx

  • Managerial finance - , Thursday, October 18, 2007 at 7:24am

    It is false, because share prices are inversely proportional to the number of shares outstanding. Share prices can be arbitrarily changed with stock splits or by combining shares.

    There is, however, a tendency for VERY low-priced stocks (i.e. "penny stocks") to be risky and more volatile, in the USA at least. In some countries like Australia, there are many low-priced stocks with excellent cash flow.

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