Which of the Following Statements Is CORRECT

question 46

Multiple Choice

Which of the following statements is CORRECT?

• A) If a company has a WACC = 12% and its free cash flow is expected to grow at a constant rate of 5%, this implies that the stock's dividend yield is also 5%.
• B) The free cash flow valuation model for constant growth, V_op = FCF₁/(WACC − g), can be used to value firms whose free cash flows are expected to decline at a constant rate, i.e., to grow at a negative rate.
• C) The value of operations of a stock is the present value of all expected future free cash flows, discounted at the free cash flow growth rate.
• D) The constant growth model cannot be used for a zero growth stock, where free cash flows are expected to remain constant over time.
• E) The constant growth model is often appropriate for evaluating start-up companies that do not have a stable history of growth but are expected to reach stable growth within the next few years.

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Definitions:

Deprived Environment

A deprived environment is one that lacks the necessary resources, stimuli, or conditions for the proper physical, emotional, or intellectual development of an individual.

Heritability

A measure of how much of the variation in a trait within a population is due to genetic differences among individuals in that population.

Genetic Factors

Elements within an organism's genetic makeup that influence its physical and behavioral traits.

Intelligence

The ability to learn, understand, and apply knowledge, solve problems, and adapt to new situations.