Which of the following statements regarding fundamental and relative valuation techniques is TRUE?
A) Both techniques require an appropriate estimate of the required rate of return and the growth rate.
B) Both techniques require an estimate of a discount rate.
C) Both techniques require an estimate of future cash flows and a discount rate.
D) Both techniques require an estimate of future cash flows and a growth rate.
E) Both techniques require an estimate of future cash flows, the required rate of return, and a growth estimate.

Question

Quizplus · Accepted Answer

Fundamental valuation requires estimates of the required rate of return and growth rate, while relative valuation involves comparing valuation multiples, which also indirectly depend on these estimates.

Which of the Following Statements Regarding Fundamental and Relative Valuation