The value of a company's stock can be estimated by dividing the company's current year estimated annual income by the investment capitalization rate.

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Quizplus · Accepted Answer

This statement is true. The formula for the value of a company's stock is commonly known as the price-to-earnings ratio (P/E ratio), which is calculated by dividing the current market price of the stock by the earnings per share (EPS). The earnings per share can be estimated by dividing the company's current year estimated annual income by the number of outstanding shares. The investment capitalization rate represents the required rate of return for investors, which is usually estimated using the capital asset pricing model (CAPM) or other methods.

The Value of a Company's Stock Can Be Estimated by Dividing