- CFA Exams
- CFA Level I Exam
- Study Session 11. Equity Valuation (3)
- Reading 28. Free Cash Flow Valuation
- Subject 5. Free cash flow model variations
CFA Practice Question
Two-stage FCFE models are most suitable for firms
A. in a highly regulated industry.
B. with patents that form a barrier to entry.
C. in the growth phase of their industrial life cycle.
Explanation: Such firms have two distinct phases of growth phases: before and after the expiry of their patents.
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