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Please discuss the advantages and disadvantages of estimating the valuation of an asset using comparable firms, i.e. using valuation multiples. How are valuation multiples built?

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Please discuss the advantages and disadvantages of estimating the valuation of an asset using comparable firms, i.e. using valuation multiples. How are valuation multiples built? What is the implicit assumption made by the analyst when applying a valuation multiple to a target firm

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