Which of the Following Statements Is FALSE

question 2

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 a 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 a firm's scale to the value of the firm.

---

Definitions:

Oil Quality

A measure of the properties of oil, including its viscosity, impurities level, and performance characteristics.

Sum Of Squares

A statistical measure used to describe the dispersion or variation of a set of data points by squaring their deviations from the mean.

Standard Error

A statistical measure that estimates the accuracy with which a sample distribution represents a population by using the standard deviation.

Dependent Variable

Outcomes or responses that researchers are interested in explaining or predicting, which change in response to independent variables.