A stock's price is based on the expected present value, at the market capitalization rate, of all the stock's future earnings.

Name: A stock's price is based on the expected present value, at the market capitalization rate, of all the stock's future earnings.
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Question

Quizplus · Accepted Answer

A stock's price is based on the expected present value of all future cash flows, such as dividends, not just earnings, discounted at the market capitalization rate.

A Stock's Price Is Based on the Expected Present Value