Security A has a stock price of $40, and 55% of the value of the...
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Accounting
Security A has a stock price of $40, and 55% of the value of the stock is in the form of net present value of growth opportunities (NPVGO). Security B also has a stock price of $40 but the net present value of growth opportunities accounts for 20% of the value of stock B.
Which of the following is/are likely correct.
I. Stock A will give us a higher return than Stock B.
II. An investment in stock A is probably riskier than an investment in stock B.
III. Stock A has higher forecast earnings growth than stock B.
| I only | ||
| II and III only | ||
| I and II only | ||
| I, II, and III |
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