The share price today depends on:
A)the expected future holding period and the discount rate.
B)the expected future dividends and the capital gains.
C)the expected future dividends, capital gains and the discount rate.
D)the expected future holding period and capital gains.
E)None of the above.

Question

Quizplus · Accepted Answer

The share price today is influenced by the expected future dividends, which represent the income that shareholders can receive in the form of earnings distributions, and the expected capital gains, which represent the increase in the value of the stock over time. Additionally, the discount rate is a factor that affects the present value of these future cash flows. Therefore, the correct answer is option C, which includes all three factors - future dividends, capital gains, and the discount rate.

The Share Price Today Depends On