When Estimating the Cost of Equity by Use of the DCF

question 66

True/False

When estimating the cost of equity by use of the DCF method, the single biggest potential problem is to determine the growth rate that investors use when they estimate a stock's expected future rate of return. This problem leaves us unsure of the true value of rs.

---

Definitions:

Periodicals

Publications, such as magazines or journals, that are issued at regular intervals over time.

Dipole Moments

A measure of the separation of positive and negative electrical charges within a molecule, affecting the molecule's polarity.

Carboxylic Acids

Organic compounds characterized by the presence of a carbonyl group (C=O) bonded to a hydroxyl group (-OH).

Amino Acids

The building blocks of proteins, consisting of an amino group, a carboxylic acid group, and a unique side chain.