In Theory,all Three Valuation Models,when Correctly Implemented with Internally Consistent

question 48

Multiple Choice

In theory,all three valuation models,when correctly implemented with internally consistent assumptions,will produce the same estimates of value.However,in practice,which of the following errors can result in different value estimates?

• A) incomplete or inconsistent earnings and cash flow forecasts.
• B) inconsistent estimates of weighted average costs of capital.
• C) incorrect continuing value computations.
• D) All of these errors result in different value estimates.

Understand the basic concept and application of Bayes' Law.

Identify the different types of probabilities involved in Bayes' Law (prior, likelihood, and posterior probabilities).

Apply Bayes' Law to compute posterior probabilities based on given conditions and prior information.

Differentiate between prior, likelihood, and posterior probabilities.

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