The value of a stock depends on the ability of the company to generate dividends and the expected price of the stock when the stockholder sells her shares.

Question

Quizplus · Accepted Answer

The value of a stock is indeed influenced by the company's ability to generate dividends, as this represents the income a shareholder can expect from holding the stock. Additionally, the expected future selling price of the stock is crucial because it reflects the capital gains investors anticipate, which together with dividends, determine the total return on their investment.

The Value of a Stock Depends on the Ability of the Company