Trading Comps Modeling Exam – 100 Questions 2025-2026 -
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Section 1: Conceptual Questions (MCQs & True-False, 30
Questions)
Q1. The primary purpose of a trading comps analysis is to:
A) Determine intrinsic value using DCF
B) Estimate relative value using market multiples
C) Forecast revenue growth
D) Evaluate historical stock performance
Answer: B) Estimate relative value using market multiples
Rationale: Trading comps focus on relative valuation, comparing the target to publicly traded
peers using multiples like EV/EBITDA, P/E, etc.
Q2. Which multiple is least affected by capital structure?
A) EV/EBITDA
B) P/E
C) Price/Book
D) Dividend Yield
Answer: A) EV/EBITDA
Rationale: EV/EBITDA accounts for both equity and debt, neutralizing capital structure
differences, unlike P/E, which is equity-only.
, Q3. True or False: Trading comps provide intrinsic value.
Answer: False
Rationale: They provide market-based relative value, not intrinsic value like a DCF.
Q4. Which factor is least important when selecting comps?
A) Industry
B) Size and scale
C) Geography
D) CEO tenure
Answer: D) CEO tenure
Rationale: Operational similarity matters more than leadership tenure.
Q5. EV includes:
A) Market cap only
B) Debt only
C) Market cap + Net debt
D) Equity + cash only
Answer: C) Market cap + Net debt
Rationale: Enterprise Value = Equity Value + Net Debt, representing total company value.
Q6. P/E multiple is more sensitive to:
A) Capital structure
B) Non-cash charges
C) Revenue growth
D) Both A and B
Answer: D) Both A and B
Rationale: P/E is affected by net income, which is impacted by interest and depreciation.
Q7. EV/Revenue is most useful for:
A) Mature, profitable companies
B) High-growth companies with low profits
C) Financial institutions
D) Utilities
Answer: B) High-growth companies with low profits
Rationale: EBITDA may be low or negative; EV/Revenue provides a valuation metric even
when profits are minimal.
Q8. True or False: EV/EBITDA includes depreciation.
Answer: False
Rationale: EBITDA excludes depreciation and amortization to focus on operational cash flow.
Questions And Answers Latest Updates With Correct Answers 100% With
Complete Solutions Pass Guaranteed-Graded A+
• .
Section 1: Conceptual Questions (MCQs & True-False, 30
Questions)
Q1. The primary purpose of a trading comps analysis is to:
A) Determine intrinsic value using DCF
B) Estimate relative value using market multiples
C) Forecast revenue growth
D) Evaluate historical stock performance
Answer: B) Estimate relative value using market multiples
Rationale: Trading comps focus on relative valuation, comparing the target to publicly traded
peers using multiples like EV/EBITDA, P/E, etc.
Q2. Which multiple is least affected by capital structure?
A) EV/EBITDA
B) P/E
C) Price/Book
D) Dividend Yield
Answer: A) EV/EBITDA
Rationale: EV/EBITDA accounts for both equity and debt, neutralizing capital structure
differences, unlike P/E, which is equity-only.
, Q3. True or False: Trading comps provide intrinsic value.
Answer: False
Rationale: They provide market-based relative value, not intrinsic value like a DCF.
Q4. Which factor is least important when selecting comps?
A) Industry
B) Size and scale
C) Geography
D) CEO tenure
Answer: D) CEO tenure
Rationale: Operational similarity matters more than leadership tenure.
Q5. EV includes:
A) Market cap only
B) Debt only
C) Market cap + Net debt
D) Equity + cash only
Answer: C) Market cap + Net debt
Rationale: Enterprise Value = Equity Value + Net Debt, representing total company value.
Q6. P/E multiple is more sensitive to:
A) Capital structure
B) Non-cash charges
C) Revenue growth
D) Both A and B
Answer: D) Both A and B
Rationale: P/E is affected by net income, which is impacted by interest and depreciation.
Q7. EV/Revenue is most useful for:
A) Mature, profitable companies
B) High-growth companies with low profits
C) Financial institutions
D) Utilities
Answer: B) High-growth companies with low profits
Rationale: EBITDA may be low or negative; EV/Revenue provides a valuation metric even
when profits are minimal.
Q8. True or False: EV/EBITDA includes depreciation.
Answer: False
Rationale: EBITDA excludes depreciation and amortization to focus on operational cash flow.
