Firm A generates more cash flow while taking less risk than Firm B.The stock price of Firm A should be higher than the stock price of Firm B.

Question

Quizplus · Accepted Answer

Firm A's ability to generate more cash flow while taking less risk implies that it is a more sound and stable investment option compared to Firm B. As a result, investors will be willing to pay more for shares of Firm A, driving up the stock price.

Firm a Generates More Cash Flow While Taking Less Risk