|
LOS j: Explain the relationship of the residual income model to the dividend discount and free cash flow to equity models.
Q1. Which of the following statements least accurately explains the relationship between the residual income (RI) model, the dividend discount model (DDM), and free cash flow to equity (FCFE):
A) FCFE models use historical cash flows.
B) All the models discount future cash flows or income at the required rate of return.
C) RI models use an equity value from the balance sheet plus the present value of expected future residual income.
Q2. Which description of the relationship among residual income, dividend discount (DDM) and free cash flow to equity (FCFE) models is least accurate?
A) Residual income differs from DDM and FCFE in that residual income starts with book value.
B) Residual income differs from DDM and FCFE in that it discounts income rather than cash.
C) The different models should result in different intrinsic values because of the theoretical differences in the models.
Q3. Which statement best describes the relationship between the residual income model and the free cash flow to equity model?
A) Intrinsic value calculated by both should be the same if the assumptions are the same.
B) They do not rely on accounting assumptions.
C) They both discount a future stream of cash flows.
Q4. A use of the residual income (RI) valuation approach is:
A) providing a check of consistency between competing approaches like free cash flow of equity (FCFE) and dividend discount model (DDM) .
B) deferring value more than in competing valuation approaches.
C) providing more reliable estimates of terminal value.
[此贴子已经被作者于2009-3-9 14:56:36编辑过] | 
发表于 2009-3-9 14:55
| 
