CFA Practice Question

There are 57 practice questions for this study session.

CFA Practice Question

Which one of the following is NOT a major advantage of the relative valuation approach?
A. Grounded in a sound economic principle that similar assets should sell at similar prices.
B. The relative valuation approach is simple and easy to understand. It is related to market prices and accounting figures that are readily available.
C. Intrinsic value can be inferred without assuming that the comparison asset is fairly priced.
Explanation: The opposite is true. The method of comparables does not specify intrinsic value without making the further assumption that the comparison asset is fairly priced.

User Contributed Comments 2

User Comment
D3456 I picked C, however in B: Related to market prices and accounting figures which are readily available" - Why accounting figures? Does this imply that we don't have to adjust the accounting numbers of comps to ensure consistency?
MAGUED I PICKED C
You need to log in first to add your comment.