Describe patterns of cash flows for share of common stock

Describe two patterns of cash flows for a share of common stock. How does the market find out the value of the most common cash flow pattern for common stock?
Cash flows for share of common stock contain dividend payments and the price attained for the eventual sale of the share. Common stock valuation is complex by the fact that common stock dividends are hard to predict compared to the interest and principal payments on a bond, or dividends at preferred stock. Certainly, corporations may pay common stock dividends irregularly, or not pay dividends at all.
As along with bonds and preferred stock, the market values common stock by estimating the present value of the expected future cash flows from the common stock.

   Related Questions in Finance Basics

  • Q : Meaning of weakens US dollar in

    What does it mean while the U.S. dollar weakens in the foreign exchange market? While the U.S. dollar weakens in the foreign exchange market one U.S. dollar purchase fewer units of another country's currency. It costs more U.S. dollars to purch

  • Q : Question-total level of employment and

    Normal 0 false false

  • Q : Define the term Surplus Define the term

    Define the term Surplus: It is an outdated term for a fund’s excess of assets (or resources) over liabilities.

  • Q : Crowding out influence Normal 0 false

    Normal 0 false false

  • Q : Explain Plan of Financial Adjustment

    Plan of Financial Adjustment (PFA): This is the plan proposed by a department, accepted by the Department of Finance, and acknowledged by the State Controller's Office (SCO), to allow the SCO to assign costs paid from one item to one

  • Q : Do mergers result in layoffs Do mergers

    Do mergers result in layoffs?Entire employment in the banking industry in fact has increased slightly over the last ten years. Some mergers do result in layoffs. Though, several banks demolish their staff largely through attrition to ease the tr

  • Q : Explain agents and their

    Normal 0 false false

  • Q : Public finance can you do this

    can you do this homework? My state Taxes

  • Q : What is Operating Expenses and Equipment

    Operating Expenses and Equipment (OE&E): This is a class of a support appropriation which comprises objects of expenditure like general expenses, communication, printing, travel, data processing, tools, and accessories for the equipment.

  • Q : Describe risk aversion Describe risk

    Describe risk aversion? Risk aversion is the tendency to ignore additional risk. Risk-averse people will ignore risk if they can, unless they attain additional compensation for letting that risk. In finance, the added compensation is a higher ex

©TutorsGlobe All rights reserved 2022-2023.