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:

Obsessive-compulsive

Relating to or characterized by persistent, unwanted thoughts (obsessions) and repetitive, ritualistic behaviors (compulsions) which one feels driven to perform.

Ritualistic Behavior

Repeated actions performed in a specific sequence, often with symbolic meaning, and sometimes related to cultural or religious practices.

Stubborn

Showing determination not to change one's attitude or position on something, especially in spite of good arguments or reasons to do so.

Customary Pricing

Setting prices based on what is traditionally expected or accepted within the market or among competitors.