A Major Difference Between the Dividend Discount Model (DDM)and the Free

question 50

Multiple Choice

A major difference between the dividend discount model (DDM) and the free cash flow to equity model (FCFE) is that the FCFE:

• A)accounts for potential capital gains and the DDM does not.
• B)measures what a firm could pay out in dividends and the DDM measures what is actually paid.
• C)measures both dividend growth and stability and the DDM only measures the dividend growth.
• D)bases its calculations on future value techniques while the DDM uses present value calculations.