[amp_mcq option1=”stock extrinsic value” option2=”stock intrinsic value” option3=”dividend intrinsic value” option4=”stock intrinsic value” correct=”option2″]
The correct answer is: B. stock intrinsic value.
The dividend present value for a period of non-constant growth is used to calculate the present value of all future dividends. The horizon value is the present value of all future dividends after the non-constant growth period. The sum of the dividend present value and the horizon value is the stock intrinsic value.
Stock intrinsic value is the theoretical value of a stock based on its fundamental characteristics, such as its assets, earnings, and cash flow. It is often used as a benchmark to compare the stock’s market price.
Stock extrinsic value is the value of a stock based on factors other than its fundamental characteristics, such as investor sentiment, market conditions, and liquidity. It is often used to determine a stock’s fair value.
Dividend intrinsic value is the value of a stock based on the present value of its future dividends. It is often used as a measure of a stock’s long-term potential.