Series 79 practice questioneasyPrecedent Transaction Analysis
Which best describes a 'control premium' in precedent transaction analysis?
- AA discount for lack of marketability
- BA penalty for regulatory risk
- CAn amount paid above market price for majority ownership✓ Correct answer
- DAn adjustment for currency fluctuations
Explanation
Why C — An amount paid above market price for majority ownership
A control premium is typically paid to acquire a controlling stake, above the unaffected market price. Confusing it with discounts or penalties misrepresents deal structures.
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