The ________ Approach to Valuing a Business Uses the Price-Earnings

question 121

Multiple Choice

The ________ approach to valuing a business uses the price-earnings ratios of similar businesses to establish the value of a company.

• A)balance sheet
• B)capitalized earnings
• C)discounted future earnings
• D)market

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Definitions:

Future Value

The value of an investment or a sum of money projected to grow by a specific date, factoring in compound interest or returns.

Interest Rate

The percentage of a sum of money charged for its use, which can vary based on factors such as inflation, supply and demand of credit, and governmental policy.

Annual

Relating to a period of one calendar year, used to measure or describe events, reports, or statistics that occur or are accumulated yearly.

Bank Account

An account held at a financial institution that allows for the deposit and withdrawal of money.