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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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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
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.