FinMa 2 - Stocks

Stock valuation is more precise than bond valuation as stock cash flows are more certain.

False

When the firm decides to retain a portion of its earnings, the stockholders are indirectly investing in the firm.

True

The stockholder’s expected rate of return consists of a dividend and interest yield.

False

The common stock of a non-growth firm is valued in the same manner as its preferred stock.

True

Common stockholders bear more risk than debtholders but less risk than preferred stockholders.

False