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no hand writing Valuing a financial institution has limitations not applied to other firms. Select the statement that best describes these limitations or the reasons
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Valuing a financial institution has limitations not applied to other firms. Select the statement that best describes these limitations or the reasons behind them. Banks must be valued using relative valuation; therefore there is no way to arrive at a true intrinsic value for a bank, only a relative one. Dividends are the most appropriate cash flow to use when valuing a bank because all bank must pay a dividend according to current regulations. Free Cash Flows cannot be used when valuing banks due to the inability to reliably interpret the relationship between operating and financing liabilities and their associated costs Step by Step Solution
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