If the P/E Ratio for the Comparable Firm Is Equal

question 31

True/False

If the P/E ratio for the comparable firm is equal to 10 and the after-tax earnings of the target firm are $2 million, the market value of the target firm would be $5 million.

---

Definitions:

Normal

Refers to what is considered usual, typical, or standard within a specific context or by societal norms.

Statistical Probability

The likelihood of an event occurring, measured on a scale from 0 to 1, where 0 means the event cannot happen and 1 means it will certainly happen.

Clinically Significant

A degree of significance in medical findings or outcomes that indicates an important change, especially in the diagnosis or treatment of a condition.

Socioeconomic Group

A categorization of people according to their economic and social position, often based on income, education, and occupation.