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Basic Question 3 of 5
When residual income is constantly negative, a company' stock price should ______.
B. decrease
C. remain the same
A. increase
B. decrease
C. remain the same
User Contributed Comments 1
| User | Comment |
|---|---|
| davidt876 | i think it's more pertinent to mention that *earnings yield increases since this valuation method uses earnings as its cash flow. also if the company doesn't pay a dividend then the dividend yield can't increase. |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
calculate and interpret residual income, economic value added, and market value added;
CFA® 2025 Level II Curriculum, Volume 4, Module 24.