CFA Practice Question

There are 195 practice questions for this study session.

CFA Practice Question

Which statement is true regarding growth rate?

A. The capitalization rate is a growth implicit rate but the discount rate is not.
B. The discount rate used in the DCF method is a growth implicit rate, but the capitalization rate is not.
C. Both rates are growth implicit rates.
Correct Answer: A

The DCF applies an explicit growth rate - the discount rate does not consider growth.

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