In Valuation of Common Stock, the Price/earnings Multiple Approach Is

question 92

True/False

In valuation of common stock, the price/earnings multiple approach is considered superior to the use of book or liquidation values since it considers expected earnings.

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Definitions:

Duress

A condition where a person performs an act as a result of violence, threat, or other pressures against them, undermining their free will.

Privity of Contract

A legal doctrine stating that only parties involved in a contract are entitled to enforce it or be sued under it.

Royal Bank

Typically refers to a bank that has been granted a royal charter, recognizing it as a privileged financial institution.

Equitable Assignment

An equitable assignment is the assignment or transfer of rights or interests in a property or contract to another party, recognized by equity and not necessarily by law.