A firm's stock price most closely reflects which of the following?
A)Current interest rates
B)Expected future cash flows of the firm
C)The amount of debt held by the firm
D)None of the above

Question

Quizplus · Accepted Answer

A firm's stock price is primarily determined by the expected future cash flows of the firm. This is because the stock represents ownership in the firm and investors are interested in the future profits and earnings of the company. Interest rates may impact the overall market but are not a direct factor in the specific stock price, and the amount of debt held by the firm may impact the company's financial health but does not have a direct correlation to the stock price.

A Firm's Stock Price Most Closely Reflects Which of the Following