Question #52
Reading: Reading 20 Discounted Dividend Valuation
PDF File: Reading 20 Discounted Dividend Valuation.pdf
Page: 21
Status: Correct
Correct Answer: A
Question
Which of the following is least likely a valid approach to determining the appropriate discount rate for a firm's dividends?
Answer Choices:
A. Free cash flow to firm (FCFF)
B. Arbitrage pricing theory (APT)
C. Capital asset pricing model (CAPM)
Explanation
FCFF is another discounted cash flow model, not a method to determine required returns.
Each of the other answers is a valid approach to determining an appropriate discount rate.