Question #13
Reading: Reading 18 Corporate Restructuring
PDF File: Reading 18 Corporate Restructuring.pdf
Page: 6
Status: Unattempted
Correct Answer: A
Question
Which of the following is least likely a disadvantage of comparable transaction analysis (CTA)?
Answer Choices:
A. Historical transactions may have occurred under different conditions
B. Estimates of value are derived directly from recent prices for actual deals completed in the marketplace
C. The CTA approach implicitly assumes that the M&A market valued past transactions appropriately
Explanation
Comparable transaction analysis uses market prices of actual transactions; this is an
advantage, not a disadvantage (compared to DCF analysis, which is based on several
estimated inputs).