Which of the following is NOT a positive attribute of the price-earnings multiple valuation model?
A)It is easy to use.
B)It implicitly assumes that comparable firms are already fairly pried in the market place.
C)It is forward-looking.
D)It is based on relative market measures rather than book measures.

Question

Quizplus · Accepted Answer

This is not a positive attribute because assuming that comparable firms are already fairly priced in the market place may not always be accurate, leading to inaccurate valuations.

Which of the Following Is NOT a Positive Attribute of the Price-Earnings