The Free Cash Flow Valuation Model Is Based on the Same

question 113

True/False

The free cash flow valuation model is based on the same principle as dividend valuation models; that is, the value of a share of stock is the present value of future cash flows.

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Definitions:

Shares

Units of ownership interest in a corporation or financial asset that represent an equal proportion in the distributing of any profits, if any are declared, in the form of dividends.

Capital Gain

Capital Gain is the profit earned from the sale of an asset or investment when the selling price exceeds the purchase price.

Dividends

Payments made by a corporation to its shareholder members, reflecting the earnings of the company distributed among its shareholders.

Dividend Yield

This ratio in finance shows the comparison between a company's annual dividend payout and its stock price.