Which of the following would likely be the best comparable to use to value an investment in the stock of General Motors Corporation?

Question

Quizplus · Accepted Answer

An investment in the stock of Ford Motor Company would be the best comparable to use to value an investment in the stock of General Motors Corporation since both are companies operating in the same industry and facing similar economic and market conditions. Comparing and contrasting the financial statements, ratios and other key metrics of General Motors and Ford would provide useful insights into the valuation of General Motors' stock. The other options are not comparable since they are not in the same industry or do not share similar risk and return characteristics as General Motors' stock. The best comparable to value an investment in the stock of General Motors Corporation would be an investment in the stock of a direct competitor such as Ford Motor Company. This would allow for a more accurate comparison of the financial performance and valuation metrics of the two companies in the same industry. A long-term U.S. government Treasury bond or a bond issue of General Motors Corporation are not comparable securities, as they have very different risk and return characteristics. An S&P 500 index mutual fund can provide a general benchmark for the overall market performance, but it may not be specific enough for valuation purposes.

Which of the Following Would Likely Be the Best Comparable