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.

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Definitions:

Ilium

The most superior part of the hip bone. It is broad and flaring.

Pubis

The area that forms the front of a hip bone.

Bone Cells

Cells found within the bone, including osteoblasts, osteocytes, and osteoclasts, that are responsible for the formation, maintenance, and resorption of bone tissue.

Nasal Bones

Paired bones that form the bridge of the nose, providing structure and support.