Final answer:
According to Mark Cuban's views, non-dividend stocks are valued based on what someone is willing to pay for them (option a), emphasizing the speculative aspect and potential for capital gain. This contrasts with dividend stocks, which provide a more direct and stable return on investment.
Step-by-step explanation:
When evaluating non-dividend stocks, investor and businessman Mark Cuban emphasizes that their value is ultimately determined by what someone else is willing to pay for them. This perspective highlights the speculative nature of such investments, as they do not provide the traditional return via dividends. In the case of non-dividend-paying stocks, the expectation and hope is that the company’s growth will translate into an increase in stock price, thereby offering investors a capital gain when they sell the stock at a higher price than they bought it.
Dividend stocks, on the other hand, represent a more traditional investment return path where companies pay out a portion of their profits to shareholders. Stable companies that have reached a certain level of maturity, like Coca-Cola and electric companies, often provide regular dividends. This creates an income stream for investors and can be a mark of a financially sound company.
However, the potential returns from stocks can vary widely; a company’s stock price can greatly increase, allowing for substantial capital gains on sale, or it can plummet to zero. Thus, non-dividend stock investments carry a significant risk, especially in the short run. Yet, for many investors, the liquidity and the chance for high returns over time can make such stocks an attractive part of their portfolio.