The terminal value of a share of stock:
A)Is similar to the maturity value of a bond
B)Refers to the share value at the end of the investor's holding period
C)Is the value received by investors upon liquidation of the firm
D)Is the price for shares traded through a dealers' market

Question

Quizplus · Accepted Answer

The terminal value of a share of stock refers to the expected value of the share at the end of the investor's holding period. This could be based on factors such as the company's growth potential, future earnings, and overall market trends. It is not the same as the maturity value of a bond, which refers to the amount that the bondholder will receive when the bond reaches its maturity date. It is also not necessarily the value received by investors upon liquidation of the firm, as this would depend on the specific circumstances of the liquidation. The price for shares traded through a dealers' market is simply the market price at the time of the trade and may not reflect the overall terminal value of the stock.

The Terminal Value of a Share of Stock