True or False a Investors will invest in a stock only if it gives a higher return than they could get elsewhere Therefore, if a stock is fairly priced, its expected return will be greater than the cost of equity capital b A stock that is expected to pay a level dividend in perpetuity has a value of...

a False If the stock is fairly priced the expected r ...

True or False? a. Investors will invest in a stock only if it gives a higher return

Question:

True or False?
a. Investors will invest in a stock only if it gives a higher return than they could get elsewhere. Therefore, if a stock is fairly priced, its will be greater than the capital.
b. A stock that is expected to pay a level in has a value of P0 = DIV1/r. Any company that can reinvest to grow its earnings will have a greater value.
c. The discount model is still logically correct even for that do not currently pay a Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Expected Return
The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these... Perpetuity
Perpetuity refers to payments that are made without an end or maturity date. A perpetuity is classified as an annuity, which is something that earns a dividend or receives a payment at a regularly scheduled interval, generally yearly. So, how...