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Basic Question 2 of 5
If control equity interest is being valued, ______ is the most suitable model to define a company's cash flows.
B. free cash flow model
C. residual income model
D. None of them can be used when an investor takes a control perspective.
A. dividend discount model
B. free cash flow model
C. residual income model
D. None of them can be used when an investor takes a control perspective.
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Learning Outcome Statements
compare dividends, free cash flow, and residual income as inputs to discounted cash flow models and identify investment situations for which each measure is suitable;
CFA® 2025 Level II Curriculum, Volume 3, Module 21.