True or False

1. Divestiture is the sale of a major component or segment of a business (eg brand or product line) to another company

2. Spin off is separating a segment or component business and transforming this into a separate legal entity whose ownership will be transferred to shareholders

3. Leveraged buyout is the acquisition of another business by using significant debt which uses the acquired business as a collateral.

4. Synergy can be attributable to more efficient operations, cost reductions, increased revenues,combined products markets or cross-disciplinary talents of the combined organization

5. Corporate finance mainly involves managing the firm's capital structure including funding sources and strategies that the business should pursue to maximize firm value

6. Valuation is also important to businesses because of legal and tax purposes.

7. Top down forecasting approach - Forecast starts from international or national macroeconomic projections with utmost consideration to industry specific forecasts

8. Bottom-up forecasting approach - Forecast starts from the lower levels of the firm and bulids the forecast as it captures what will happen to the company

9. Sensitivity analysis is the common methodology in valuation exercises wherein multiple other analyses are done to understand how changes in an input or variable will affect the outcome (i.e. firm value).

10. Uncertainty is captured in valuation models through cost of capital or discount rate

11. Uncertainty is captured in valuation models through cost of capital or discount rate

12. Valuation is the estimation of an asset's value based on variables perceived be related to future investment returns, on comparisons with similar assets, or, when relevant, on estimates of immediate liquidation proceeds

13. Definition of value may vary depending on the context Different definitions of value include intrinsic value, going concem value, liquidation value and fair market value

14. Valuation plays significant role in the business world with respect to portfolio management, business transactions or deals, corporate finance, legal and tax purposes

15. Generally valuation process involves these five steps understanding of the business, forecasting financial performance, selecting right valuation model, preparing valuation model based on forecasts and applying conclusions and providing recommendations

16. Value is defined at a specific point in time

17. Value varies based on ability of business to generate future cash flows

18. Market dictates appropriate rate of return for investors

19. Value is influenced by transferability of future cash flows

20. Value is impact by liquidity