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Basic Question 2 of 3
The fair value of a company is
B. always >= its going concern value.
C. normally less than its going concern value.
D. normally more than its going concern value.
A. always <= its going concern value.
B. always >= its going concern value.
C. normally less than its going concern value.
D. normally more than its going concern value.
User Contributed Comments 6
| User | Comment |
|---|---|
| taowu | good one! |
| vi2009 | liquidation = how liquid the stock is ... the more popular the stock is in the market the more liquid it is, otherwise there is a liquidity discount |
| Shalva | I got this one wrong .... Interesting concept |
| qwsx | really a awesome q..must admit |
| rhardin | vi2009, this has nothing to do with the "liquidity" of the stock. It has to do with liquidating a company because it is better dissolved then for it to continue in operations. |
| Roy1 | Hmm....Got this wrong. |
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Edward Liu
Learning Outcome Statements
define valuation and intrinsic value and explain sources of perceived mispricing;
explain the going concern assumption and contrast a going concern value to a liquidation value;
describe definitions of value and justify which definition of value is most relevant to public company valuation;
CFA® 2025 Level II Curriculum, Volume 3, Module 20.