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Basic Question 2 of 5
If control equity interest is being valued, ______ is the most suitable model to define a company's cash flows.
B. free cash flow model
C. residual income model
D. None of them can be used when an investor takes a control perspective.
A. dividend discount model
B. free cash flow model
C. residual income model
D. None of them can be used when an investor takes a control perspective.
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I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
compare dividends, free cash flow, and residual income as inputs to discounted cash flow models and identify investment situations for which each measure is suitable;
CFA® 2025 Level II Curriculum, Volume 3, Module 21.