Question

The valuation of a common stock today primarily depends on: -the number of shares outstanding and...

The valuation of a common stock today primarily depends on:

-the number of shares outstanding and the number of its shareholders.

-its expected future dividends and its discount rate.

-Wall Street analysts.

-the present value of its future earnings per share and its discount rate.

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Answer #1

Option B is correct

The valuation of a common stock today primarily depends on its expected future dividends and its discount rate

PV = Div/r

Option A is incorrect because the number of shares outstanding times the share price gives the valuation of the company.

Option C is incorrect because Wall Street analysts just estimates the valuation of the company

Option D is incorrect because the valuation depends present value of its future dividends per share, not earnings and its discount rate

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