The price that investors are willing to pay for a firm's securities can best be described by which of the following statements?

A) If a company is performing poorly, investors will not buy that company's securities.
B) If a company is performing well, investors will buy the company's stock at almost any price because the price of the stock should increase.
C) Since the value of a company's securities depends largely on future cash flows, investors will consider the company's performance in estimating the future cash flows that will come from owning its securities.
D) Since risk is difficult to assess for any particular company, investors don't usually consider risk when deciding how much to pay for a company's securities.

The price of a firm's securities is largely dependent on the estimated future cash flows that will come from owning them. Therefore, investors will consider the performance of the company to estimate these future cash flows. Factors that affect a company's future cash flows include its earnings, growth prospects, and expected risk. Option A is too extreme as investors may still buy securities of a company that is performing poorly if they believe that the company has the potential to do better in the future. Option B is incorrect because investors will not buy a stock at any price if they believe that the stock is overpriced compared to the company's fundamentals. Option D is incorrect because investors do consider risk when deciding how much to pay for a company's securities.