Dividend models suggest that the value of a financial asset is determined by future cash flows.A problem arises,however,in that future cash flows may be difficult to predict as to ________ of these cash flows.
A)both the timing and the amount
B)the timing but not the amount
C)the amount but not the timing
D)neither the timing nor the amount

Question

Quizplus · Accepted Answer

Dividend models forecast the value of an asset by posing future cash flows that the asset is expected to generate. The two variables that can influence future cash flows are the amount and timing. Hence, the value of an asset may be difficult to forecast as to both the amount and timing of future cash flows. Therefore, the correct option is A.

Dividend Models Suggest That the Value of a Financial Asset