Why should I choose AnalystNotes?

Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.

Find out more

Basic Question 3 of 5

When residual income is constantly negative, a company' stock price should ______.

A. increase
B. decrease
C. remain the same
Check Answer Previous Q Next Q Print

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.
You need to log in first to add your comment.
Your review questions and global ranking system were so helpful.
Lina

Lina

Learning Outcome Statements

calculate and interpret residual income, economic value added, and market value added;

CFA® 2026 Level II Curriculum, Volume 4, Module 24.