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Basic Question 3 of 4
What models provide the basis and rationale for the method which is based on forecasted fundamentals?
B. Discounted cash flow models.
C. The law of one price.
A. P/E comparables.
B. Discounted cash flow models.
C. The law of one price.
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I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
contrast the method of comparables and the method based on forecasted fundamentals as approaches to using price multiples in valuation, and explain economic rationales for each approach;
calculate and interpret a justified price multiple;
describe rationales for and possible drawbacks to using alternative price multiples and dividend yield in valuation;
CFA® 2025 Level II Curriculum, Volume 4, Module 23.