Question #2
Reading: Reading 20 Discounted Dividend Valuation
PDF File: Reading 20 Discounted Dividend Valuation.pdf
Page: 1
Status: Incorrect
Correct Answer: A
Your Answer: A
Question
Relative to traditional financial models like the dividend discount model, the biggest advantage of spreadsheet modeling is:
Answer Choices:
A. accuracy of computations
B. quantity of computations
C. simplicity of computations
Explanation
Computations are no simpler or more complicated on a spreadsheet as opposed to a
calculator. Accuracy tends to be improved with the use of a spreadsheet, because you
don't have to punch numbers into a calculator at any stage. However, someone truly
concerned with accuracy can do a fine job with a calculator. The spreadsheet stands out
when it comes to quantity. Analysts can program many permutations and scenarios into a
spreadsheet, using minutes to do what would take hours or even days or weeks with a
calculator.