We can estimate a stock's value by
A) using the book value of the total stockholder equity section.
B) discounting the future dividends and future stock price appreciation.
C) compounding the past dividends and past stock price appreciation.
D) using the book value of the total assets divided by the number of shares outstanding.

Question

Quizplus · Accepted Answer

Discounting the future dividends and future stock price appreciation is a common method for estimating a stock's value, known as the Dividend Discount Model (DDM) or Discounted Cash Flow (DCF) analysis. This approach considers the present value of expected future cash flows from dividends and potential price appreciation.

We Can Estimate a Stock's Value by