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Transaction Comps Exam | Wall Street
Prep 2025 Edition Complete Exam with
Verified Questions, Step-by-Step
Calculations, and Rationales A+ Graded |
Updated for 2025 | Comprehensive
Financial Modeling Practice
Question 1
What is the primary purpose of a precedent transaction analysis
(transaction comps)?
A) To determine the current market value of a company based
on its stock price
B) To estimate the value of a target company based on prices
paid for similar companies in past M&A deals
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C) To calculate the liquidation value of a company
D) To forecast future cash flows
Answer: B
Rationale: Precedent transaction analysis values a target by
examining acquisition multiples from historical M&A transactions
involving comparable companies.
Question 2
Which of the following best describes a “control premium”?
A) The additional amount a buyer pays over the target’s pre-
announcement stock price to gain control
B) A discount for lack of marketability
C) The difference between enterprise value and equity value
D) The premium paid for a minority stake
Answer: A
*Rationale: The control premium reflects the value of acquiring a
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controlling interest, typically 20-40% above the unaffected stock
price.*
Question 3
True or False: Transaction comps multiples are typically lower
than trading comps multiples because they exclude a control
premium.
Answer: False
Rationale: Transaction multiples are usually higher than trading
comps because they include a control premium. Acquirers pay a
premium over the market price.
Question 4
What does “LTM” stand for in transaction comps?
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A) Last twelve months
B) Long-term margin
C) Limited transaction multiple
D) Last traded multiple
Answer: A
Rationale: LTM (or TTM) refers to the trailing twelve months of
financial data, often used to compute multiples based on the period
prior to the deal announcement.
Question 5
Which multiple is most commonly used in transaction comps?
A) Price-to-earnings (P/E)
B) Enterprise value to EBITDA (EV/EBITDA)
C) Price-to-book (P/B)
D) Dividend yield
Transaction Comps Exam | Wall Street
Prep 2025 Edition Complete Exam with
Verified Questions, Step-by-Step
Calculations, and Rationales A+ Graded |
Updated for 2025 | Comprehensive
Financial Modeling Practice
Question 1
What is the primary purpose of a precedent transaction analysis
(transaction comps)?
A) To determine the current market value of a company based
on its stock price
B) To estimate the value of a target company based on prices
paid for similar companies in past M&A deals
,Page 2 of 128
C) To calculate the liquidation value of a company
D) To forecast future cash flows
Answer: B
Rationale: Precedent transaction analysis values a target by
examining acquisition multiples from historical M&A transactions
involving comparable companies.
Question 2
Which of the following best describes a “control premium”?
A) The additional amount a buyer pays over the target’s pre-
announcement stock price to gain control
B) A discount for lack of marketability
C) The difference between enterprise value and equity value
D) The premium paid for a minority stake
Answer: A
*Rationale: The control premium reflects the value of acquiring a
,Page 3 of 128
controlling interest, typically 20-40% above the unaffected stock
price.*
Question 3
True or False: Transaction comps multiples are typically lower
than trading comps multiples because they exclude a control
premium.
Answer: False
Rationale: Transaction multiples are usually higher than trading
comps because they include a control premium. Acquirers pay a
premium over the market price.
Question 4
What does “LTM” stand for in transaction comps?
, Page 4 of 128
A) Last twelve months
B) Long-term margin
C) Limited transaction multiple
D) Last traded multiple
Answer: A
Rationale: LTM (or TTM) refers to the trailing twelve months of
financial data, often used to compute multiples based on the period
prior to the deal announcement.
Question 5
Which multiple is most commonly used in transaction comps?
A) Price-to-earnings (P/E)
B) Enterprise value to EBITDA (EV/EBITDA)
C) Price-to-book (P/B)
D) Dividend yield
