The Two Most Popular Discounted Earnings Models Appear to Be

question 9

Multiple Choice

The two most popular discounted earnings models appear to be:

• A) free cash flow and dividend discount model.
• B) sales/market capitalization and price-earnings.
• C) discounted abnormal earnings and residual income.
• D) price-cash flow and dividend discount.

Understand the difference between systematic and unsystematic risk.

Analyze the impact of portfolio diversification on risk management.

Recognize how different types of risks affect asset prices and returns.

Understand the concept of beta and its significance in measuring systematic risk.

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Definitions:

Dissolved Gas

Gases that are incorporated into magma and can expand, leading to explosive volcanic eruptions as pressure decreases.

Rhyolite

A mostly fine-grained, felsic igneous rock, generally of volcanic origin; can contain glass, volcanic ash, pieces of pumice, and variable amounts of visible crystals (phenocrysts).

Thermal Energy

The internal energy present in a system due to the random movements of its molecules or atoms.

Conduction

The process by which heat or electricity is directly transmitted through a substance when there is a difference of temperature or of electrical potential.