Managerial finance

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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


  • Managerial finance -

    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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