Which of the Following Statements Is FALSE

question 31

Multiple Choice

Which of the following statements is FALSE?

• A)The fact that a firm has an exceptional management team,has developed an efficient manufacturing process,or has just secured a patient on a new technology is ignored when we apply a valuation multiple.
• B)Valuation multiples have the advantage that they allow us to incorporate specific information about the firm's cost of capital or future growth.
• C)For firms with substantial tangible assets,the ratio of price to book value of equity per share is sometimes used.
• D)Using multiples will not help us determine if an entire industry is overvalued.

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Definitions:

Belief

An acceptance that something exists or is true, especially one without proof.

Fulfillment

The achievement of something desired, promised, or predicted, leading to satisfaction or happiness.

Self-Fulfilling Prophecy

The phenomenon where an individual's expectations about another person or situation cause that expectation to become a reality.

Rudely

In a manner that is impolite, discourteous, or lacking in social graces.