Which of the Following Statements Is FALSE

question 15

Multiple Choice

Which of the following statements is FALSE?

• A)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)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.
• C)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.
• 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:

Creative Thinkers

Individuals who are able to think in novel and unusual ways and to come up with unique solutions to problems.

Superficial Approach

A method or attitude that lacks depth and thoroughness, often focusing only on apparent or surface-level aspects.

Running Endurance

The capacity to sustain prolonged physical activity, especially running, over distances or time periods, through the development of muscular and cardiovascular strength.

Reliability

The extent to which a measurement instrument yields reliable and uniform outcomes across different occasions.