Asked by Sarah Albertson on May 05, 2024
Verified
The market value of common stock is primarily based on:
A) the firm's future earnings.
B) book value.
C) total assets.
D) retained earnings.
Future Earnings
Expected future profits of a company, often used to assess its valuation or the potential return on investment.
Market Value
The current quoted price at which an asset or service can be bought or sold in a public marketplace.
- Ascertain the factors influencing the intrinsic value of stocks and the contribution of fundamental analysis.
Verified Answer
AA
Abdullah AladibMay 08, 2024
Final Answer :
A
Explanation :
The value of a company's common stock is primarily based on investors' expectations of the company's future earnings, as reflected in its current and projected financial performance, growth prospects, and other relevant factors. Book value, total assets, and retained earnings are important factors in evaluating a company's financial health and stability, but they do not necessarily indicate its future growth potential or market value.
Learning Objectives
- Ascertain the factors influencing the intrinsic value of stocks and the contribution of fundamental analysis.
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