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:

Psychosis Spectrum Disorders

A range of mental health disorders characterized by a disconnection from reality, including schizophrenia and bipolar disorder.

Learning Disabilities

A group of disorders characterized by inadequate development of specific academic, language, and speech skills.

Social Skills

The abilities used by individuals to interact and communicate with one another effectively, including verbal and non-verbal communication.

Remediation

The process of providing corrective education or training to improve skills in individuals who are lacking in certain areas.