Question

1. T/F   An EV/EBITDA of 10x is always a cheaper firm on a relative basis then one with a multiple of 8

2.. T/F As the economy picks up steam, spreads will contract causing bond and stock prices to increase.

Answer 1

Question 1 "False"

EV refers to the enterprise valuation and EBITDA refers to the earnining before interest , tax and the depreciaiton ..The EV/EBITDA ratio of 10X is considered as a good but the lower the multiple then the lower the valuation the company is therefore, the firm eoth the lower multiple is cosidered as cheaper.

Question 2: "False"

When the economy is growing then it leads to higher inflation that is general increase in price of goods and services and to curb the inflation central bank would try to increase the interest rate so that the supply of money is adequate, this rise cause the bonds price to fall as there is inverse relationship between the bond price and the interest rate.