The main difference between reactive and proactive valuation models is:
A)Reactive models determine what the value should be based on future values of cash flows and earnings while proactive models use general rules of thumb and the pricing of other securities.
B)Reactive models focus on management expectations while proactive models use analyst forecasts.
C)Proactive models determine what the value should be based on future values of cash flows and earnings while reactive models use general rules of thumb and the pricing of other securities.
D)Reactive models are very ad hoc while proactive models are precise.

Question

Quizplus · Accepted Answer

Proactive models aim to determine the intrinsic value of an asset based on its future cash flows and earnings, making predictions about its value. Reactive models, on the other hand, rely on existing market conditions, using rules of thumb or the pricing of comparable securities to assess value.

The Main Difference Between Reactive and Proactive Valuation Models Is