Concepts Review and Critical Thinking Questions

1. Stock Valuation Why does the value of a share of stock depend on dividends?

2. Stock Valuation A substantial percentage of the companies listed on the NYSE and the Nasdaq don't pay dividends, but investors are nonetheless willing to buy shares in them. How is this possible given your answer to the previous question?

3. Dividend Policy Referring to the previous questions, under what circumstances might a company choose not to pay dividends?

Ross et al.: Fundamentals of Corporate Finance, Sixth Edition, Alternate Edition

III. Valuation of Future Cash Flows

8. Stock Valuation

© The McGraw-Hill Companies, 2002

CHAPTER 8 Stock Valuation

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