Which of the Following Statements Is FALSE

question 25

Multiple Choice

Which of the following statements is FALSE?

• A)The fact that a firm has an exceptional management team,has developed an efficient manufacturing process,or has just secured a patent on a new technology is ignored when we apply a valuation multiple.
• B)Valuation multiples have the advantage that they allow us to incorporate specific information about the firm's cost of capital or future growth.
• C)For firms with substantial tangible assets,the ratio of price to book value of equity per share is sometimes used.
• D)Using multiples will not help us determine if an entire industry is overvalued.

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Definitions:

Rent Control

Government-imposed limits on the amount landlords can charge for leasing a property to ensure affordable housing.

Exclusion

A decision or practice of leaving someone or something out of a group, activity, or benefit.

Antitrust Enforcement

The legal processes and actions by which governmental authorities regulate, restrict, or prevent monopolistic practices and promote competition.

Vertical Relationships

Interactions between businesses or entities at different levels of the supply chain, such as manufacturers and retailers.