Consider the following statements: Statement 1: Analysts prefer using the arithmetic mean over using the...
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Finance
Consider the following statements: Statement 1: Analysts prefer using the arithmetic mean over using the geometric mean to compute the historical equity market risk premium. Statement 2: Analysts prefer using the long-term government bond yield over the short-term government bond yield as the risk-free rate when computing the historical equity market risk premium. Which of the following is most likely?
Select one:
a. Only Statement 1 is correct.
b. Only Statement 2 is correct.
c. Both statements are incorrect.
Which of the following is most likely regarding the Fama-French model?
Select one:
a. The smaller the company and the greater the book-to-market ratio, the greater the required return.
b. The larger the company and the lower the book-to-market ratio, the greater the required return.
c. The smaller the company and the lower the book-to-market ratio, the greater the required return.
Which of the following is not a factor used when forecasting with the FCFF and FCFE modeling techniques?
Select one:
a. Noncash charges
b. Pretax operating income
c. Investments in fixed and working capital
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