Series 79 practice questionhardComparable Company Analysis - Outliers
When conducting a comparable company analysis, how should outlier multiples be treated to ensure a robust valuation?
- AUse only the highest multiples available
- BAlways include them for completeness
- CExclude them from average and use median multiples✓ Correct answer
- DReplace them with analyst projections
Explanation
Why C — Exclude them from average and use median multiples
Outlier multiples can distort averages and are typically excluded from means, while medians offer a more robust measure. Including all or replacing with projections is not best practice.
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