Page 1 of 141
Trading Comps Exam | Wall Street Prep
2025 Edition Complete Exam with Verified
Questions, Step-by-Step Calculations, and
Rationales A+ Graded | 100% Updated
for 2025 | Comprehensive Equity
Valuation Practice
Question 1
What is the primary purpose of a comparable company analysis
(trading comps)?
A) To determine the intrinsic value of a company using discounted
cash flows
B) To estimate the value of a target company based on the
market values of similar publicly traded companies
,Page 2 of 141
C) To calculate the liquidation value of a company
D) To assess a company’s creditworthiness
Answer: B
Rationale: Trading comps is a relative valuation method that uses
the current market multiples of peer companies to derive a
valuation range for a target company.
Question 2
Trading comps are also known as:
A) Precedent transactions
B) Comparable company analysis (CCA) or public comps
C) Discounted cash flow (DCF)
D) Leveraged buyout (LBO) analysis
Answer: B
Rationale: Trading comps is synonymous with comparable company
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analysis (CCA) and public comps. Precedent transactions refer to
M&A deals.
Question 3
Which of the following best describes a “peer group” in trading
comps?
A) A set of companies that are direct competitors in the same
industry with similar size, growth, and profitability
B) Any public company in the same country
C) Companies with the same stock exchange listing
D) Companies with identical capital structures
Answer: A
Rationale: The peer group should consist of companies with similar
business models, industry, size, growth prospects, and risk profiles
to ensure meaningful comparisons.
, Page 4 of 141
Question 4
True or False: Trading comps reflect the public market’s current
perception of value, including market sentiment.
Answer: True
Rationale: Trading comps are based on current stock prices, which
incorporate market expectations, sentiment, and macroeconomic
factors. This is both a strength (timely) and a limitation (can be
volatile).
Question 5
The most common multiple used in trading comps for capital-
intensive industries is:
A) Price-to-earnings (P/E)
B) Enterprise value to EBITDA (EV/EBITDA)
C) Price-to-book (P/B)
D) EV/sales
Trading Comps Exam | Wall Street Prep
2025 Edition Complete Exam with Verified
Questions, Step-by-Step Calculations, and
Rationales A+ Graded | 100% Updated
for 2025 | Comprehensive Equity
Valuation Practice
Question 1
What is the primary purpose of a comparable company analysis
(trading comps)?
A) To determine the intrinsic value of a company using discounted
cash flows
B) To estimate the value of a target company based on the
market values of similar publicly traded companies
,Page 2 of 141
C) To calculate the liquidation value of a company
D) To assess a company’s creditworthiness
Answer: B
Rationale: Trading comps is a relative valuation method that uses
the current market multiples of peer companies to derive a
valuation range for a target company.
Question 2
Trading comps are also known as:
A) Precedent transactions
B) Comparable company analysis (CCA) or public comps
C) Discounted cash flow (DCF)
D) Leveraged buyout (LBO) analysis
Answer: B
Rationale: Trading comps is synonymous with comparable company
,Page 3 of 141
analysis (CCA) and public comps. Precedent transactions refer to
M&A deals.
Question 3
Which of the following best describes a “peer group” in trading
comps?
A) A set of companies that are direct competitors in the same
industry with similar size, growth, and profitability
B) Any public company in the same country
C) Companies with the same stock exchange listing
D) Companies with identical capital structures
Answer: A
Rationale: The peer group should consist of companies with similar
business models, industry, size, growth prospects, and risk profiles
to ensure meaningful comparisons.
, Page 4 of 141
Question 4
True or False: Trading comps reflect the public market’s current
perception of value, including market sentiment.
Answer: True
Rationale: Trading comps are based on current stock prices, which
incorporate market expectations, sentiment, and macroeconomic
factors. This is both a strength (timely) and a limitation (can be
volatile).
Question 5
The most common multiple used in trading comps for capital-
intensive industries is:
A) Price-to-earnings (P/E)
B) Enterprise value to EBITDA (EV/EBITDA)
C) Price-to-book (P/B)
D) EV/sales
