Select a term from the answer bank to complete the following statements. Some answers may be used more than one; other answers may not be used at all. to the average amount of systemic risk of A. greater than A company with a market beta of 1 has systemic risk all equity securities in the market. B. equal The residual income valuation model uses the basis for valuation. and the book value of common shareholders' equity as C. expected future comprehensive income The risk-adjusted discount rate used to compute the free cash flows for all debt and equity stakeholders is the D. Clean surplus accounting E. Dirty surplus accounting is an estimate of systematic risk based on the degree of covariation between a firm's stock returns and an index of stock returns for all firms in the market. F. less than G. free cash flow H. market value If an analyst expects a firm to generate net income each period exactly equal to required earnings, then the value of the firm will be equal to the of common shareholders' equity. means that net income includes all of the recognized elements of income of the firm for common equity shareholders and dividends include all direct capital transactions between the firm and the common equity shareholders. 1. Required return on common equity (rc) J. book value K. Weighted Average Cost of Capital (WACC) L. Beta