Question #12
Reading: Reading 19 Equity Valuation - Applications and Processes
PDF File: Reading 19 Equity Valuation - Applications and Processes.pdf
Page: 6
Status: Incorrect
Correct Answer: B
Your Answer: A
Question
For an analyst valuing public equities, the relevant concept of value is most likely to be:
Answer Choices:
A. fair market value
B. orderly liquidation value
C. intrinsic value
Explanation
For an analyst valuing public equities, the most relevant definition of value is generally
intrinsic value. A value based on a going-concern assumption, rather than a liquidation
assumption, is the appropriate choice for a company that will continue to produce and sell
goods. Fair market value is the most relevant definition of value to use in an agreement
between the owners of a private business regarding the price at which the owners can sell
their ownership interest.