Which regarded as an advantage of the abnormal earnings

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Reference no: EM132930784

Problem 1: Which of the following is regarded as an advantage of the abnormal earnings growth model?

Select one:

a. Investors prefer to think in terms of earnings rather than book values

b. It does not require an understanding of accrual accounting

c. It does not require an appreciation of the concept of cum-dividend earnings

d. It is well suited to strategy analysis

Problem 2: Which of the following statements regarding the comparison between the residual earnings (RE) model and abnormal earnings growth (AEG) model is false?

Select one:

a. The RE model and AEG model will usually result in similar valuations

b. Both models can protect investors against earnings created by accounting

c. Abnormal earnings growth is equal to the change in residual earnings

d. Both models require an appreciation of the concept of cum-dividend earnings

Reference no: EM132930784

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