Assuming That Ideko Has a EBITDA Multiple of 8

question 3

Multiple Choice

Assuming that Ideko has a EBITDA multiple of 8.5,then the continuation unlevered P/E ratio of Ideko in 2010 is closest to:

• A)17.6
• B)16.4
• C)14.5
• D)19.0

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Definitions:

Debt Market

A market where investors buy and sell debt securities, typically bonds, which are promises to repay borrowed money.

Primary Market

A part of the capital market where new securities are initially sold to investors, typically through underwriting.

Secondary Market

A market where previously issued financial instruments such as stock, bonds, options, and futures are bought and sold.

Default Risk

The risk that a borrower will not make the required payments on a debt obligation, leading to a default situation.