Seeing is believing!
Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.
Basic Question 0 of 19
In the dividend discount model, a factor not affecting the discount rate (k) is the ______.
B. risk premium for stocks
C. return on assets
D. expected inflation rate
A. real risk-free rate
B. risk premium for stocks
C. return on assets
D. expected inflation rate
User Contributed Comments 6
| User | Comment |
|---|---|
| danlan | Why C? |
| wroger | Return on assets has nothing to do with discount rate. |
| anricus | Cost of Equity is made up of risk free rate + nominal rate of return. (1+Nominal rate)=(1+real rate)*(1+inflation rate) and Cost of Equity (Ke) = rf + premium |
| sam95 | Because A,B and D are directly related in determining K where as C is not a part of K. |
| zeiad | key => not |
| jonan203 | C relates to financial statement analysis |
I was very pleased with your notes and question bank. I especially like the mock exams because it helped to pull everything together.
Martin Rockenfeldt
Learning Outcome Statements
explain the rationale for using present value models to value equity and describe the dividend discount and free-cash-flow-to-equity models
calculate and interpret the intrinsic value of an equity security based on the Gordon (constant) growth dividend discount model or a two-stage dividend discount model, as appropriate
identify characteristics of companies for which the constant growth or a multistage dividend discount model is appropriate
explain advantages and disadvantages of each category of valuation model
CFA® 2025 Level I Curriculum, Volume 3, Module 8.