Which of the Following Statements Regarding Fundamental and Relative Valuation

question 42

Multiple Choice

Which of the following statements regarding fundamental and relative valuation techniques is TRUE?

• A) Both techniques require an appropriate estimate of the required rate of return and the growth rate.
• B) Both techniques require an estimate of a discount rate.
• C) Both techniques require an estimate of future cash flows and a discount rate.
• D) Both techniques require an estimate of future cash flows and a growth rate.
• E) Both techniques require an estimate of future cash flows, the required rate of return, and a growth estimate.

---

Definitions:

Economic Activities

Actions that involve the production, distribution and consumption of goods and services at all levels within a society.

Legal Right

An entitlement or justified claim enforceable by law, providing individuals or groups with autonomy or protection in certain aspects of their lives.

Resource Allocation

The process of distributing available resources among different uses identified in an economy.

Taxing Polluters

A policy approach that imposes taxes on companies or individuals who produce pollution as a means to internalize environmental externalities and encourage pollution reduction.