When using relative valuation methods such as PE or P/EBITDA, and comparing a target firm to comparable firms, what is the main purpose?

Select one:

a.

To determine if the comparable firms are actually comparable to the target firm

b.

To determine if the comparable firms are undervalued relative to the target firm

c.

To determine the correct price for the target firm

d.

To determine if the comparable firms are overvalued relative to the target firm

e.

To determine if the correct DCF valuation method (FCFF or FCFE) has been applied

f.

To determine if the target firm is overvalued, undervalued, or correctly valued.

g.

To determine if the correct DDM valuation method (single or multi-stage)