If most investors expect the same cash flows from Companies A and B but are more confident that A\'s cash flows will be closer to their expected value, which company should have the higher stock price?
belongs to book: FUNDAMENTALS OF FINANCIAL MANAGEMENT|Eugene F.Brigham, Joel F. Houston|12th Edition| Chapter number:1| Question number:2
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Accounting
If investors are more confident that Company A's cash flows will be closer to their expected value than Company B's cash flows, then investors will drive the stock price up for Company A. Consequently, Company A will have a higher stock price than Company B.
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