Homework Help Forum: investing 3-20

Posted by Johnny on Sunday, February 22, 2009 at 12:09am.

The value of common stock depends on the A. price of the stock. B. retirement date. C. present value of cash flows. D. coupon rate. I need help with this one

• investing 3-20 - Taylor, Sunday, February 22, 2009 at 12:14am

  a

  
  

• investing 3-20 - Johnny, Sunday, February 22, 2009 at 12:24am

  one of the books I read it says "Value of common stock depends on present value of expected future cash flows." so I would assume the anwer is C

  
  

• investing 3-20 - bobpursley, Sunday, February 22, 2009 at 7:31am

  There are several ways of valuing stock, C is one of them.

  
  

• investing 3-20 - drwls, Sunday, February 22, 2009 at 12:13pm

  To a "value" stock investor who follows the teachings of Benjamin Graham, the answer is (c), but in most industries, no one can be sure of future cash flows. So you need to be a good fortune teller and judge of the character of management. That is what Warren Buffett has done so well. Until now. See http://www.investopedia.com/terms/v/valueinvesting.asp What a stock is "worth" at a given time is of course what the market will pay for it.

  
  

Answer this Question

First Name:
School Subject:
Answer: