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Which of the following statements would suggest that the free cash flow (FCF) model is superior to the dividend discount model in valuing the effectiveness of "value-based" management?

a. The FCF method requires pro-forma forecasting of the firm's financial statements.

b. A firm may decide to not distribute FCF to investors.

c. Expected dividends are the result of mathematical modeling, not managerial discretion.

d. The dividend discount model does not automatically account for the replacement of depleted capital.

e. Answers a. and d. are correct.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M942640

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