Because the DDM requires multiple estimates,investors should
A)carefully examine inputs to the model.
B)perform sensitivity analysis on price estimates.
C)not use this model without expert assistance.
D)feel confident that DDM estimates are correct.
E)both A and B.

Question

Quizplus · Accepted Answer

Because the DDM requires multiple estimates, it is important for investors to carefully examine inputs to the model and perform sensitivity analysis on price estimates. Therefore, both choice A and B are valid. It is not necessary to have expert assistance to use the DDM, but it is important to thoroughly understand the inputs and assumptions used in the model to avoid making incorrect assumptions. Therefore, choice C is not the best choice, and choice D is not accurate because there is always some degree of uncertainty associated with any model or estimate.

Because the DDM Requires Multiple Estimates,investors Should