Which of the Following Statements Concerning the Valuation of Firms

question 37

Multiple Choice

Which of the following statements concerning the valuation of firms using the method of comparables is FALSE?

• A) If two different firms generate identical cash flows, the Law of One Price will imply that both firms have the same value.
• B) Valuation multiples take into account differences in the risk and future growth between the firms being compared.
• C) Comparables adjust for scale differences when valuing similar firms.
• D) Two firms that sell very similar products or offer very similar services will have different values if they are of different sizes.

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Definitions:

Therapeutic Response

The body's reaction to a treatment, indicating whether the treatment is effective in managing or curing a condition.

Surgery

A medical procedure involving the incision or manipulation of tissues to repair damage, remove disease, or improve bodily functions.

Surgeon

A medical specialist who performs surgical operations aimed at treating diseases, injuries, or deformities.

SBAR

An acronym standing for Situation, Background, Assessment, and Recommendation, used as a communication framework in healthcare settings to convey information effectively.