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Question 1a What is liquidity a measure of? Discuss the potential merits of high liquidity verses low liquidity. Question 1b You are reviewing the books

Question 1a

What is liquidity a measure of? Discuss the potential merits of high liquidity verses low liquidity.

Question 1b

You are reviewing the books of a firm you are considering purchasing and notice a considerable difference between the market value of some assets and the book value. Why might there be a difference?

Question 1c

If you consider purchasing a firm what is the firms enterprise value based on? (Hint: consider this in terms of the balance sheet entities).

Comment on the difference between enterprise value and market value.

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