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Basic Question 7 of 7
Which of the following is the LEAST ACCURATE with respect to determining terminal value in a discounted dividend model?
B. Terminal value may be estimated as the product of the expected dividends at the terminal date and the expected dividend yield for the stock at that point in time.
C. Terminal value may be estimated as the product of the expected book value per share at the terminal date and the expected price to book ratio for the stock at that point in time.
A. Terminal value may be estimated as the product of the expected earnings at the terminal date and the expected P/E ratio for the stock at that point in time.
B. Terminal value may be estimated as the product of the expected dividends at the terminal date and the expected dividend yield for the stock at that point in time.
C. Terminal value may be estimated as the product of the expected book value per share at the terminal date and the expected price to book ratio for the stock at that point in time.
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Learning Outcome Statements
calculate and interpret the value of a common stock using the dividend discount model (DDM) for single and multiple holding periods;
CFA® 2025 Level II Curriculum, Volume 3, Module 21.