The valuation of a common stock today primarily depends on
A)the number of shares outstanding and the number of its shareholders.
B)its expected future dividends and its discount rate.
C)Wall Street analysts.
D)the price to earnings ratio.

Question

Quizplus · Accepted Answer

The valuation of a common stock today primarily depends on its expected future dividends and its discount rate. This is because the current value of a stock is the sum of all future cash flows it is expected to generate, discounted to present value using the stock's discount rate. Other factors such as the number of shares outstanding and the number of shareholders, Wall Street analysts, and the price to earnings ratio may also be considered, but they are not the primary determinants of a stock's valuation.

The Valuation of a Common Stock Today Primarily Depends on