QuestionMay 22, 2025

The price that investors are willing to pay for a firm's securities can best be described by which of the following statements? If a company is performing well, investors will buy the company's stock at almost any price because the price of the stock should increase. Since the value of a company's securities depends largely on future cash flows, investors will consider the company's performance in estimating the future cash flows that will come from owning its securities. Using that information, investors will determine the price to pay for the security. Since risk is difficult to assess for any particular company, Investors don't usually consider risk when dociding how much to pay for a company's securities. ) If a company is performing poorly, investors will not buy that company's securities.

The price that investors are willing to pay for a firm's securities can best be described by which of the following statements? If a company is performing well, investors will buy the company's stock at almost any price because the price of the stock should increase. Since the value of a company's securities depends largely on future cash flows, investors will consider the company's performance in estimating the future cash flows that will come from owning its securities. Using that information, investors will determine the price to pay for the security. Since risk is difficult to assess for any particular company, Investors don't usually consider risk when dociding how much to pay for a company's securities. ) If a company is performing poorly, investors will not buy that company's securities.
The price that investors are willing to pay for a firm's securities can best be described
by which of the following statements?
If a company is performing well, investors will buy the company's stock at almost any price because the price of the
stock should increase.
Since the value of a company's securities depends largely on future cash flows, investors will consider the company's
performance in estimating the future cash flows that will come from owning its securities. Using that information,
investors will determine the price to pay for the security.
Since risk is difficult to assess for any particular company, Investors don't usually consider risk when dociding how
much to pay for a company's securities.
) If a company is performing poorly, investors will not buy that company's securities.

Solution
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Answer

Since the value of a company's securities depends largely on future cash flows, investors will consider the company's performance in estimating the future cash flows that will come from owning its securities. Using that information, investors will determine the price to pay for the security. Explanation 1. Analyze the statements Evaluate each statement based on investment principles and market behavior. 2. Identify key factors in pricing securities Consider future cash flows, company performance, and risk assessment as primary factors influencing security prices. 3. Select the most accurate statement The second statement accurately describes how investors consider future cash flows and company performance to determine the price of securities.

Explanation

1. Analyze the statements<br /> Evaluate each statement based on investment principles and market behavior.<br /><br />2. Identify key factors in pricing securities<br /> Consider future cash flows, company performance, and risk assessment as primary factors influencing security prices.<br /><br />3. Select the most accurate statement<br /> The second statement accurately describes how investors consider future cash flows and company performance to determine the price of securities.
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