Series 79: Relative Valuation Method

Taken from our FINRA Investment Banking Exam

Definition of the term Relative Valuation Method...

a valuation method that assesses a company’s value compared to its peers, relying on valuation multiples such as P/E or EV/EBITDA. Comparable companies analysis and precedent transactions analysis are relative valuation methods. Using a relative valuation method is also called benchmarking.

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