- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Valuation
- Learning Module 26. Residual Income Valuation
- Subject 3. The Residual Income Valuation Model
CFA Practice Question
The residual income model is suitable for a company
II. for which the clean surplus relationship does not hold.
III. for which ROE is not predictable but book value of equity is easily determinable.
IV. for which the cash flows are not predictable.
I. whose terminal value is very uncertain.
II. for which the clean surplus relationship does not hold.
III. for which ROE is not predictable but book value of equity is easily determinable.
IV. for which the cash flows are not predictable.
A. I and II
B. III and IV
C. I and IV
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