Which of the following best characterizes the difference between growth stocks and income stocks?

Question

Quizplus · Accepted Answer

The key difference between growth stocks and income stocks is that growth stocks prioritize reinvesting profits into the company for future growth opportunities, while income stocks prioritize paying dividends to shareholders for immediate income generation. The present value of growth opportunities (PVGO) represents the current value of expected future growth opportunities, and growth stocks typically have higher PVGO than income stocks. Therefore, option D best characterizes the difference between growth stocks and income stocks.

Which of the Following Best Characterizes the Difference Between Growth