Question #26
Reading: Reading 19 Equity Valuation - Applications and Processes
PDF File: Reading 19 Equity Valuation - Applications and Processes.pdf
Page: 10
Status: Unattempted
Correct Answer: A
Question
One justification for using multiple models to estimate firm value is:
Answer Choices:
A. the ability to examine differences in estimated values can reveal how a model’s assumptions and the perspective of the analysis are affecting the estimated values
B. the ability to learn from each successive model and to make improvements
C. the ability to streamline and economize the development process through repeated use of the same generic baseline
Explanation
One thing to remember with respect to choice of a valuation model is that the analyst
does not have to consider only one. Using multiple models and examining differences in
estimated values can reveal how a model's assumptions and the perspective of the
analysis are affecting the estimated values.