Risk,the magnitude and timing of cash flows are the key determinants of share price,which represent the wealth of owners in a firm.

Question

Quizplus · Accepted Answer

This statement is true. The risk and timing of cash flows are major factors in determining the value of a company and ultimately its share price, which reflects the company's overall value and the wealth of its owners. Higher risks typically result in lower share prices as investors demand a higher rate of return to compensate for the increased risk. Similarly, the timing of cash flows affects the expected return on investment, with future cash flows typically discounted to reflect the time value of money.

Risk,the Magnitude and Timing of Cash Flows Are the Key