There are many who claim that value is based on investor perceptions, and perceptions alone, and that cash flows and earnings do not matter. This argument is flawed because:

a. Value is determined by earnings and cash flows, and investor perceptions do not matter. 

b. Perceptions do matter, but they can change. The value must be based on something more substantial. 

c. Investors are irrational. Therefore, their perceptions should not determine value. 

d. Value is determined by investor perceptions, but it is also determined by the underlying earnings and cash flows. Perceptions must be based on reality.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below d Value ... View the full answer