ARGH!!!

CFA Level II
#1

The two-stage FCFE model is suitable for valuing firms that: A) are in an industry with significant barriers to entry. B) have very high but declining growth rate in the initial stage. C) have moderate growth in the initial phase that declines gradually to a stable rate. D) are growing at a constant growth rate equivalent to that of GNP.

#2

C?

#3

A

#4

C

#5

C?

#6

B ? what is the answer?

#7

A

#8

C is declining gradually, so i dont think its a definite two step. thats my rationale

#9

I would say B.

#10

damn you guys are fast!!! do you all have a paper weight on your F5 button or what??? gonna wait for some more responses…

#11

The H model is a 2-stage model with the linear decline from the first stage to the second stage built into the model.

#12

Storko, Couldn’t a two stage still incorprate the H-model for the gradual decline? EDIT: McLeod beat me to it.

#13

now does it decline gradually in year one or after year one? if it’s after year one, shouldn’t the h model be used? i’m thinking a.

#14

my bad, i am really bad at the cfa. the end boss is too hard for me.

#15

C would be the case of using the H model - gradually declining. C is incorrect.

#16

common mumu what is the answer?

#17

wonder2008 Wrote: ------------------------------------------------------- > C would be the case of using the H model - > gradually declining. C is incorrect. The H-model is a 2-stage model

#18

H model is a version of the two stage, no? EDIT: Can McLeod read my mind???

#19

B for me. C looks like 3 stage.

#20

mwvt9 Wrote: ------------------------------------------------------- > H model is a version of the two stage, no? > > EDIT: Can McLeod read my mind??? The answer to your question is Yes.