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:

Fail To Launch

A phrase describing young adults who struggle to transition into adulthood and independent living, often remaining dependent on their parents.

Financially Support

Providing monetary resources to assist an individual, organization, or cause.

Intimacy Versus Isolation

A stage in Erik Erikson's theory of psychosocial development focusing on young adults' struggle to form close relationships and emotional bonds.

Normative-Stage

A concept in developmental psychology referring to universally experienced phases or stages across the lifespan that align with biological or social expectations.