The Most Appropriate Discount Rate to Use When Applying a FCFE

question 53

Multiple Choice

The most appropriate discount rate to use when applying a FCFE valuation model is the

• A) required rate of return on equity.
• B) WACC.
• C) risk-free rate.
• D) None of the options are correct.

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Definitions:

Abyssal Zone

A deep-sea environment located at depths of 4,000 to 6,000 meters, characterized by high pressure, low temperatures, and complete darkness.

Benthic Zone

The ecological region at the lowest level of a body of water such as an ocean or a lake, including the sediment surface and sub-surface layers.

Littoral Zone

The shallow nearshore area of a body of water, where sunlight can reach the bottom, supporting diverse aquatic plants and animals.

Limnetic Zone

The open surface waters in a freshwater habitat, away from the shore, where there is enough light penetration to support photosynthesis.