Trading Comps Modeling Exam – 100
Questions
Section 1: Conceptual Questions (Multiple Choice &
True/False – 30 Questions)
Q1. The main purpose of trading comps analysis is:
A) Determine intrinsic value using a DCF
B) Estimate relative value using market multiples
C) Forecast revenue growth
D) Assess historical stock performance
Answer: B) Estimate relative value using market multiples
Rationale: Trading comps compare a target to similar public companies using
market multiples (EV/EBITDA, P/E, etc.) to derive relative valuation.
Q2. Which multiple is least affected by differences in capital structure?
A) EV/EBITDA
B) P/E
C) Price/Book
D) Dividend Yield
Answer: A) EV/EBITDA
Rationale: EV/EBITDA includes debt in the numerator and ignores interest
expense in EBITDA, neutralizing capital structure differences.
, Q3. True or False: Trading comps provide intrinsic value.
Answer: False
Rationale: They provide market-based relative value, not intrinsic valuation like
a DCF.
Q4. When selecting comparables, the least relevant factor is:
A) Industry
B) Geography
C) Size and scale
D) CEO tenure
Answer: D) CEO tenure
Rationale: Operational similarity is critical; leadership tenure has minimal impact
on multiples.
Q5. Enterprise Value (EV) is calculated as:
A) Market Cap only
B) Debt only
C) Market Cap + Net Debt
D) Equity + Cash
Answer: C) Market Cap + Net Debt
Rationale: EV represents total value to all stakeholders (equity + net debt).
Q6. EV/Revenue is most useful for:
A) Mature, profitable companies
B) High-growth, low-profit companies
C) Utilities
D) Banks
Answer: B) High-growth, low-profit companies
Rationale: EV/Revenue can value companies with little or negative EBITDA.
Questions
Section 1: Conceptual Questions (Multiple Choice &
True/False – 30 Questions)
Q1. The main purpose of trading comps analysis is:
A) Determine intrinsic value using a DCF
B) Estimate relative value using market multiples
C) Forecast revenue growth
D) Assess historical stock performance
Answer: B) Estimate relative value using market multiples
Rationale: Trading comps compare a target to similar public companies using
market multiples (EV/EBITDA, P/E, etc.) to derive relative valuation.
Q2. Which multiple is least affected by differences in capital structure?
A) EV/EBITDA
B) P/E
C) Price/Book
D) Dividend Yield
Answer: A) EV/EBITDA
Rationale: EV/EBITDA includes debt in the numerator and ignores interest
expense in EBITDA, neutralizing capital structure differences.
, Q3. True or False: Trading comps provide intrinsic value.
Answer: False
Rationale: They provide market-based relative value, not intrinsic valuation like
a DCF.
Q4. When selecting comparables, the least relevant factor is:
A) Industry
B) Geography
C) Size and scale
D) CEO tenure
Answer: D) CEO tenure
Rationale: Operational similarity is critical; leadership tenure has minimal impact
on multiples.
Q5. Enterprise Value (EV) is calculated as:
A) Market Cap only
B) Debt only
C) Market Cap + Net Debt
D) Equity + Cash
Answer: C) Market Cap + Net Debt
Rationale: EV represents total value to all stakeholders (equity + net debt).
Q6. EV/Revenue is most useful for:
A) Mature, profitable companies
B) High-growth, low-profit companies
C) Utilities
D) Banks
Answer: B) High-growth, low-profit companies
Rationale: EV/Revenue can value companies with little or negative EBITDA.
