The value of common stock 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.

Question

Quizplus · Accepted Answer

The value of common stock today is determined by the expected future dividends, expected capital gains (which could come from an increase in the stock price), and the discount rate (which reflects the risk and time value of money). These factors together influence an investor's decision on what the stock is worth today.

The Value of Common Stock Today Depends On