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:

General Public

The broad group of people in society who do not have a specific connection to an event, issue, or business.

Vice President of Operations

A high-level executive responsible for overseeing the day-to-day operational activities of a company to ensure efficiency and effectiveness.

Maritime Artifacts

Objects related to the sea and seafaring, such as shipwrecks, navigational instruments, and cultural objects from maritime communities, often used for historical study.

Insider Trading

The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.