The fundamental value of a share of stock is equal to which of the following?
A) The sum of coupon payments.
B) The present value of expected dividends.
C) The present value of coupon payments.
D) The present value of the expected yield.
E) The sum of expected dividends.

Question

Quizplus · Accepted Answer

The fundamental value of a share of stock is equal to the present value of the expected dividends. This is because the value of a stock is based on the future income it is expected to generate for its shareholders, which comes primarily in the form of dividends. However, it is important to note that the expected future growth of the company and other factors also play a role in determining the value of a stock.

The Fundamental Value of a Share of Stock Is Equal