According to the basic DCF stock valuation model, the value an investor should assign to a share of stock is dependent on the le

Question

Lena [83]

3 years ago

6

According to the basic DCF stock valuation model, the value an investor should assign to a share of stock is dependent on the le

ngth of time he or she plans to hold the stock.A. True B. False

Business

1 answer:

Alina [70] · Answer 1 · 2022-05-21T11:56:42+03:00

Answer:

According to the basic DCF stock valuation model, the value an investor should assign to a share of stock is dependent on the length of time he or she plans to hold the stock.

A. True

Explanation:

The DCF (Discounted Cash Flow) method of stock valuation is based on the assumption of the time-value of money. This approach considers that the cash flow that is received today is much more than the same amount of cash flow received any other time in the future. And the time of the future receipt or payment affects the amount of the cash flow, with decreasing consequences based on increasing time into the future.