Which of the following firms is likely to have a higher value from the dividend discount model, a higher value from the FCFE model or the same value from both models?
(a) A firm that pays out less in dividends than it has available in FCFE, but which invests the balance in treasury bonds.
(b) A firm which pays out more in dividends than it has available in FCFE, and then issues stock to cover the difference.
(c) A firm which pays out, on average, its FCFE as dividends.
(d) A firm which pays out less in dividends that it has available in FCFE, but which uses the cash at regular intervals to acquire other firms, with the intent of diversifying.
(e) A firm which pays out more in dividends than it has available in FCFE, but borrows money to cover the difference. (The firm is over-levered to begin with.)
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