A firm's stock price is supposed to reflect the _____ value of a firm's future earnings.
A) net present
B) fair
C) residual
D) relative
E) intrinsic

Question

Quizplus · Accepted Answer

A firm's stock price is based on the present value of its future earnings, which is calculated using the net present value method. This method takes into account the time value of money and discounts future earnings back to their present value. Therefore, the correct answer is A) net present.

A Firm's Stock Price Is Supposed to Reflect the _____