If we know the dividend stream,the future price of the stock,the future selling date of the stock,and the required return,we can price stocks just as we priced ________.
A)annuities
B)perpetuities
C)bonds
D)preferred stocks

Question

Quizplus · Accepted Answer

Stock pricing using the mentioned parameters (dividend stream, future price, future selling date, and required return) is similar to bond pricing. Both involve discounting future cash flows (dividends or coupon payments, plus the final payment of principal or stock sale proceeds) back to their present value using a required rate of return.

If We Know the Dividend Stream,the Future Price of the Stock,the