model selection

问题如下：

2. Do the reasons provided by Leigh support his use of the FCFE model to value Holt’s common stock instead of using a DDM?

选项：

A.

Yes.

B.

No, because Holt’s dividend situation argues in favor of using the DDM.

C.

No, because FCFE is not appropriate for investors taking a control perspective.

解释：

A is correct.

Justifications for choosing the FCFE model over the DDM include:

 The company pays dividends but its dividends differ significantly from the company’s capacity to pay dividends (the first reason given byLeigh).

 The investor takes a control perspective (the second reason given by Leigh).