Valuation Techniques That Convert Future Amounts to a Single Current

question 17

Multiple Choice

Valuation techniques that convert future amounts to a single current amount and determines the fair value on the basis of the value indicated by current market expectations about those future amounts is an example of:

• A)the fair value approach
• B)the income approach
• C)the cost approach
• D)the market approach

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Definitions:

Purely Competitive

Describes a market structure where many sellers offer identical products, and no single seller can influence the market price.

Concentration Ratio

A measure used in economics to assess the degree of market concentration by summing the market shares of the top firms in the industry.

Market Share

The proportion of total sales or business that a company or product secures within a particular market.

Industry

A sector of the economy characterized by the production or processing of similar goods or services.