1．An argument for using the residual income (RI) valuation approach is that:

A)   terminal value does not dominate total present value as is the case in dividend and free cash flow valuation models.

B)   the models rely on accounting data that can be manipulated by management.

C)   reliance on accounting data requires numerous and significant adjustments.

D)   the clean surplus relation fails to hold.

2．An argument for using the residual income (RI) valuation approach is that:

A)   the models rely on accounting data that can be manipulated by management.

B)   reliance on accounting data requires numerous and significant adjustments.

C)   the clean surplus relation fails to hold.

D)   the models focus on economic rather than just on accounting profitability.

3．An argument against using the residual income (RI) valuation approach is that:

A)   the models focus on economic rather than just on accounting profitability.

B)   the models rely on accounting data that can be manipulated by management.

C)   terminal value does not dominate total present value as is the case in dividend and free cash flow valuation models.

D)   the models are applicable to firms that do not pay dividends or that do not have positive expected free cash flows in the short run.

答案和详解如下：

1．An argument for using the residual income (RI) valuation approach is that:

A)   terminal value does not dominate total present value as is the case in dividend and free cash flow valuation models.

B)   the models rely on accounting data that can be manipulated by management.

C)   reliance on accounting data requires numerous and significant adjustments.

D)   the clean surplus relation fails to hold.

The correct answer was A)

Terminal value does not dominate total present value as is the case in dividend and free cash flow valuation models. The rest of the responses are arguments against using the RI approach.

2．An argument for using the residual income (RI) valuation approach is that:

A)   the models rely on accounting data that can be manipulated by management.

B)   reliance on accounting data requires numerous and significant adjustments.

C)   the clean surplus relation fails to hold.

D)   the models focus on economic rather than just on accounting profitability.

The correct answer was D)

The models focus on economic rather than just on accounting profitability. The rest of the responses are arguments against using the RI approach.

3．An argument against using the residual income (RI) valuation approach is that:

A)   the models focus on economic rather than just on accounting profitability.

B)   the models rely on accounting data that can be manipulated by management.

C)   terminal value does not dominate total present value as is the case in dividend and free cash flow valuation models.

D)   the models are applicable to firms that do not pay dividends or that do not have positive expected free cash flows in the short run.

The correct answer was B)

An argument against using the RI approach is that the models rely on accounting data that can be manipulated by management. The other responses are arguments in favor of the approach.