Which of the Following Statements Concerning the Valuation of Firms

question 41

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) Comparables adjust for scale differences when valuing similar firms.
• C) Valuation multiples take into account differences in the risk and future growth between the firms being compared.
• D) Two firms that sell very similar products or offer very similar services will have different values if they are of different sizes.

---

Definitions:

Epidural

A regional anesthesia that blocks pain in a particular area of the body, commonly used during childbirth.

Natural Birth

The process of childbirth without the use of surgery or drugs for pain relief, emphasizing minimal medical intervention.

Teratogens

Substances or factors that can cause congenital abnormalities or developmental malformations in a fetus when a mother is exposed during pregnancy.