If You Want to Value a Firm but Do Not

question 21

Multiple Choice

If you want to value a firm but do not want to explicitly forecast its dividends, the simplest model for you to use is ________.

• A) the discounted free cash flow model
• B) the dividend-discount model
• C) the enterprise value model
• D) None of the above models can be used if you do not want to forecast dividends or use of debt.

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Definitions:

Hypothesized Relationship

A proposed connection or association between variables, often suggested as a basis for further empirical investigation.

Subjectivity

The quality of being based on or influenced by personal feelings, tastes, or opinions, as opposed to objective, measurable facts.

Research

is the process of systematically observing reality to assess the validity of a theory.

Deception

The act of misleading or providing false information to others in order to gain an advantage or hide the truth.