Which of the Following Statements Is FALSE

question 54

Multiple Choice

Which of the following statements is FALSE?

• A)Even two firms in the same industry selling the same types of products,while similar in many respects,are likely to be of different size or scale.
• B)In the method of comparables,we estimate the value of the firm based on the value of other,comparable firms or investments that we expect will generate very similar cash flows in the future.
• C)Consider the case of a new firm that is identical to an existing publicly traded company.If these firms will generate identical cash flows,the Law of One Price implies that we can use the value of the existing company to determine the value of the new firm.
• D)A valuation multiple is a ratio of some measure of the firm's scale to the value of the firm.

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Definitions:

Sectoral Shifts

Changes in economic activity or labor market demand across different sectors or industries over time.

Temporarily Cause Unemployment

Situations or policies that lead to a short-term increase in unemployment, as workers transition between jobs or industries adjust to new conditions.

Sectoral Shifts

Changes in the economic landscape that cause resources (like labor) to move from one industry or sector to another, often due to technological changes or globalization.

Frictional Unemployment

Short-term unemployment that occurs when transitioning between jobs or entering the workforce.