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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. |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
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.