Series 79 practice questionmediumPrecedent Transaction Analysis
If a precedent transaction was announced during a period of elevated market volatility, which of the following is the most likely impact on its observed multiples?
- AMultiples will be unaffected
- BMultiples may be inconsistent with those from more stable periods✓ Correct answer
- CMultiples will always be lower than the average
- DThe transaction should be disregarded entirely
Explanation
Why B — Multiples may be inconsistent with those from more stable periods
Market volatility can cause transaction multiples to deviate from historical norms, so analysts must interpret these with caution. Assuming consistency or simply discarding such transactions ignores useful context.
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