All of the following are true for market based valuation methods except for which of the following?
A) Assumes that markets are efficient such that current values reflect all the information currently known about the business
B) Current values represent what a willing buyer and seller are willing to pay for a business in the absence of full information
C) Market based methods are always superior to discounted cash flow techniques
D) Include comparable company and recent transactions methods
E) Include the tangible book value approach

Question

Quizplus · Accepted Answer

Market based methods are not always superior to discounted cash flow techniques. They may not reflect the future potential of a business or its ability to generate cash flows. Therefore, a combination of market-based methods and DCF may be used to arrive at a fair valuation.

All of the Following Are True for Market Based Valuation