Question: Ture or False Explain 1. The dividend discount model will generally undervalue stocks relative to free cash flow to equity model. 2. Once a firm

Ture or False Explain

1. The dividend discount model will generally undervalue stocks relative to free cash flow to equity model.

2. Once a firm reaches steady state, the profit margins grow at the rate g.

3. The Price to EBITDA ratio should not be used for relative valuation.

4. It is easier to value firms using FCFF as it does not require information about

leverage.

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