Everything else being the same, the higher a firm's earnings growth, the lower the value of its common stock.

Question

Quizplus · Accepted Answer

This statement is false. In fact, the higher a firm's earnings growth, the higher the potential for future profits, which can lead to an increase in the value of its common stock. However, the actual value of the stock will also depend on other factors such as market fluctuations, competition, and overall economic conditions.

Everything Else Being the Same, the Higher a Firm's Earnings