Question #1
Reading: Reading 19 Equity Valuation - Applications and Processes
PDF File: Reading 19 Equity Valuation - Applications and Processes.pdf
Page: 1
Status: Incorrect
Correct Answer: B
Your Answer: A
Question
A valuation of a firm based on the comparison of the firm with the market value of other firms is known as a:
Answer Choices:
A. peer group valuation
B. relative valuation
C. comparison valuation
Explanation
A relative valuation is a valuation based on comparing the firm to other firms with similar
characteristics. Market multiples are commonly used as the basis of relative valuations.