True or false

In the Dividend Discount Model with two-stage growth, the cash flows are: Net Income + depreciation - investment - Delta WC - principal repayments + new debt Issues. One difference between the Free Cash Flow to Equity (FCFE) and the Dividend Discount Model is that, while dividends cannot be negative, FCFE can be negative, especially during the early life of a company, when it undertakes large investments In fixed assets and working capital. Stockman Saks and Morgan Charley are two Investment banks with similar business models. However. Stockman Saks' earnings are more dependent on trading than on underwriting and M&A advice (which are far more important to Morgan Charley). Because trading results are more volatile -and therefore more at risk than underwriting and M&A advice-, the price-to-earnings ratio of Stockman Saks should be higher than the PE ratio of Morgan Charley. Is that last statement true or false? when we estimate the long-term rate of growth of a firm, we need to keep In mind that. In the long run a firm cannot grow at a rate significantly greater than the rate In the economy In which it operates