In contrast to the free cash flow to equity (FCFE) approach, which values cash flows that are available for distribution to stockholders, the dividend discount model (DDM) approach values the stream of cash flows that stockholders expect to receive through dividend payments.

Question

Quizplus · Accepted Answer

The statement correctly describes the differences between the FCFE approach and the DDM approach. The FCFE approach values the cash flows available for distribution to stockholders, while the DDM approach values the expected stream of future dividend payments.

In Contrast to the Free Cash Flow to Equity (FCFE)