- CFA Exams
- CFA Exam: Level II 2021
- Study Session 10. Equity Valuation (2)
- Reading 27. Discounted Dividend Valuation
- Subject 1. Streams of expected cash flows
CFA Practice Question
The application of ______ depends on the quality of accounting disclosure and the degree of distortion.
B. Free cash flow model.
C. Residual income model.
A. Dividend discount model.
B. Free cash flow model.
C. Residual income model.
Correct Answer: C
User Contributed Comments 2
| User | Comment |
|---|---|
| ostrich | Tricky! |
| MonkeySee | Not Really, ostrich: A) Discounts are fixed payments, especially past ones B) Cash flow statments are difficult to manipulate C) Net Income is based on many accounting assumptions! |