{"id":22550,"date":"2025-06-16T19:50:45","date_gmt":"2025-06-16T19:50:45","guid":{"rendered":"https:\/\/gaviki.com\/blog\/?p=22550"},"modified":"2025-06-16T19:50:47","modified_gmt":"2025-06-16T19:50:47","slug":"which-of-the-following-is-least-likely-to-be-identified-as-a-relative-valuation-model","status":"publish","type":"post","link":"https:\/\/gaviki.com\/blog\/which-of-the-following-is-least-likely-to-be-identified-as-a-relative-valuation-model\/","title":{"rendered":"Which of the following is least likely to be identified as a relative valuation model"},"content":{"rendered":"\n<p>Which of the following is least likely to be identified as a relative valuation model? Select one: <\/p>\n\n\n\n<p>A. H model. <\/p>\n\n\n\n<p>B. PEG. <\/p>\n\n\n\n<p>C. PS. <\/p>\n\n\n\n<p>D. PE.<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><strong>The correct answer and explanation is:<\/strong><\/mark><\/p>\n\n\n\n<p>The correct answer is: <strong>A. H model<\/strong><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Explanation:<\/h3>\n\n\n\n<p><strong>Relative valuation models<\/strong> are methods used to value a company by comparing it to other similar companies or industry benchmarks using valuation multiples. These models typically rely on ratios that relate a company&#8217;s market value to some fundamental metric such as earnings, sales, or growth. Common relative valuation multiples include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>P\/E (Price-to-Earnings) ratio:<\/strong> Compares the company\u2019s stock price to its earnings per share.<\/li>\n\n\n\n<li><strong>P\/S (Price-to-Sales) ratio:<\/strong> Compares the company\u2019s stock price to its revenue per share.<\/li>\n\n\n\n<li><strong>PEG (Price\/Earnings to Growth) ratio:<\/strong> Adjusts the P\/E ratio by the company\u2019s earnings growth rate, giving a sense of valuation relative to expected growth.<\/li>\n<\/ul>\n\n\n\n<p>All three of these (PE, PS, PEG) are classic examples of <strong>relative valuation models<\/strong> because they value a company by comparing its multiples to those of other companies or the industry average.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">What is the <strong>H Model<\/strong>?<\/h3>\n\n\n\n<p>The <strong>H Model<\/strong> is a type of <strong>discounted cash flow (DCF) model<\/strong>, not a relative valuation model. It is a <strong>hybrid dividend discount model<\/strong> that is used to estimate the value of a stock by assuming a gradual transition from a higher initial growth rate to a stable, lower long-term growth rate. The H Model captures a changing growth rate over a specific period, blending a high-growth phase with a mature phase.<\/p>\n\n\n\n<p>Because the H Model relies on <strong>forecasted dividends and intrinsic value calculations<\/strong>, it is considered an <strong>intrinsic valuation model<\/strong>, not a relative valuation model. It looks at the company\u2019s own projected cash flows rather than comparing multiples to other companies.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Summary:<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Relative valuation models<\/strong> (P\/E, P\/S, PEG) use market multiples compared against peers or benchmarks.<\/li>\n\n\n\n<li>The <strong>H Model<\/strong> is a <strong>discounted cash flow (intrinsic) valuation model<\/strong>, based on estimating present value of future dividends.<\/li>\n\n\n\n<li>Thus, the H Model is <strong>least likely<\/strong> to be identified as a relative valuation model.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Which of the following is least likely to be identified as a relative valuation model? Select one: A. H model. B. PEG. C. PS. D. PE. The correct answer and explanation is: The correct answer is: A. H model Explanation: Relative valuation models are methods used to value a company by comparing it to other [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-22550","post","type-post","status-publish","format-standard","hentry","category-quiz-questions"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/22550","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=22550"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/22550\/revisions"}],"predecessor-version":[{"id":22551,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/22550\/revisions\/22551"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=22550"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=22550"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=22550"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}