Equity valuation models based on dividends,cash flows,and earnings have been the topic of many theoretical and empirical research studies in recent years.All of the following are true regarding these studies except:
A) share prices in the capital markets generally correlate closely with share value
B) share prices do not always equal share values
C) temporary deviations of price from value occur
D) unexpected changes in earnings, dividends, and cash flows do not correlate closely with changes in stock prices

Question

Quizplus · Accepted Answer

This statement is not true. Unexpected changes in earnings, dividends, and cash flows have a significant impact on stock prices, as seen in the reactions of the stock market to quarterly earnings reports or dividend changes.

Equity Valuation Models Based on Dividends,cash Flows,and Earnings Have Been