Which of the Following Models Provides Investors with a Method

question 10

Multiple Choice

Which of the following models provides investors with a method of calculating a required return for a stock?

• A) DuPont model
• B) Risk premium model
• C) Fisher model
• D) Capital asset pricing model

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Definitions:

Cash Flows

The inflows and outflows of cash for a business, representing the movement of money into and out of the organization.

Future Value of Money

A concept in finance that calculates the value of a current asset at a future date, factoring in interest or rates of return over time.

Invested

The act of allocating resources, typically money, into something with the expectation of generating income or profit.

Net Present Value Method

A method used in capital budgeting to evaluate the profitability of an investment or project by calculating the present value of its expected cash flows minus the initial investment.