Studies That Have Examined the Relationship Between EVA and MVA

question 13

Multiple Choice

Studies that have examined the relationship between EVA and MVA have found

• A) An inverse relationship.
• B) A positive relationship.
• C) A poor relationship.
• D) EVA always exceeded MVA.
• E) MVA always exceeded EVA.

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Definitions:

Undervalued

Describes a security or other type of investment that is selling for a price presumed to be less than its true intrinsic value.

Overvalued

A term describing a situation in which a security or an asset is trading at a price exceeding its intrinsic value.

Noncontrolling Interest

Noncontrolling interest, also known as minority interest, represents the portion of a subsidiary company’s equity that is not owned by the parent company.

Acquisition Method

An accounting technique used in consolidating the financial statements of a group of companies when one acquires control over the other.