Answer:
1. A) A stock's intrinsic value is based on true risk in the company
2. B) A company that has been distributing a portion of their earnings every quarter for the past six years
3. B) Successful companies benefit consumers
C) Most people have an important stake in the stock market.
Explanation:
1. ..... Based on your understanding of stock prices and intrinsic values, which of the following statements is true?
A) A stock's intrinsic value is based on true risk in the company.
The Intrinsic value of a stock takes into account the market sentiment of a given stock which means that I shows the riskiness of it.
2. Which of the following companies would you choose to evaluate if you were using the discounted dividend model to estimate the value of the company's stock?
B) A company that has been distributing a portion of their earnings every quarter for the past six years.
The Dividend Discount Model uses constant dividends in calculation of stock price so a company that has been paid dividends is very much Preferred than one that isn't.
3. Which of the following describe the reason(s) why maximization of intrinsic stock value benefits society. Check all that apply.
B) Successful companies benefit consumers
C) Most people have an important stake in the stock market.
Successful companies do indeed benefit consumers as they will pass on their wealth as well as paying workers better to stimulate growth.
Also a lot of people are invested in the stock market. Maximising Intrinsic value thus increases worth.
If you need any clarification do react or comment.
