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Basic Question 0 of 7
Since D/P = (r - g) / (1 + g), and P/CF = (1 + g) /(r - g), therefore D/P = CF/P. True or False?
User Contributed Comments 8
| User | Comment |
|---|---|
| HenryQ | Good question! |
| ikaneng | which also means that if the 2 g's are equal, then D/P = CF/P? |
| gnacinka | dividend is a kind of CF, but different that they mean |
| NIKKIZ | Mathematically, 1+g/r-g is not equal to r-g/1+g... |
| NIKKIZ | Or am I incorrect? |
| sogah | very good question lol |
| endurance | KA-boom ... very useful for understanding the concepts |
| JMBrown | NIKKIZ,1+g/r-g is P/CF and they are comparing D/P and CF/P using the reciprocal. So it would actually be D/P=r-g/1+g and CF/P=r-g/1+g only with varying definitions for g. |
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Learning Outcome Statements
describe the classification, measurement, and disclosure under International Financial Reporting Standards (IFRS) for 1) investments in financial assets, 2) investments in associates, 3) joint ventures, 4) business combinations, and 5) special purpose and variable interest entities;
distinguish between IFRS and US GAAP in their classification, measurement, and disclosure of investments in financial assets, investments in associates, joint ventures, business combinations, and special purpose and variable interest entities;
analyze how different methods used to account for intercorporate investments affect financial statements and ratios.
CFA® 2026 Level II Curriculum, Volume 2, Module 10.