In Valuing a Business, the Methods That Buyers and Sellers

question 50

Multiple Choice

In valuing a business, the methods that buyers and sellers can use include ________.

• A) Market-based value
• B) Book value
• C) Future earnings
• D) All of the above
• E) None of the above

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Definitions:

Marginal Shareholder

An investor perceived to be influential in determining a stock's price by their decisions to buy or sell at the margin.

Common Stock

Shares of ownership in a corporation, giving holders voting rights and a dividend based on the company’s profitability.

Cost of Debt

The interest rate a company pays on its borrowings, often expressed as a percentage.

Cost of Equity

The return a firm theoretically pays to its equity investors, i.e., shareholders, to compensate for the risk they undertake by investing their capital.