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.

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Definitions:

Two-switch AND Gate

A basic digital logic gate that outputs a high signal or true only if both input signals are high or true.

Output

The result or product of a system's process, typically referring to power, data, or material produced by a system or device.

Light Emitting Diode

A semiconductor device that emits light when electric current flows through it, commonly used for indicators, displays, and lighting.

Digital Display

An electronic screen or panel that shows information in visual form through digits, often found in devices like clocks, meters, and dashboards.