What walter is most accurate with respect to

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Reference no: EM132918620

Scott Walter works as an equity portfolio manager at Jones Investment Management, a firm that provides management services for equity portfolios. Walter is using price multiples for valuation of stocks in the telecommunication industry. While discussing their appropriate implementation with Joseph Lee, his colleague at the firm, Walter made the following comments:

Statement 1: "Valuation using multiples can be approached from two perspectives. First is the method of comparables and the other is the method based on forecasted fundamentals. A justified price multiple is the fair value of a multiple found by using the method of forecasted fundamentals."

Statement 2: "When using trailing earnings to calculate the P/E ratio, analysts need to make a number of accounting adjustments. Of them, potential dilution of EPS generally makes the least demand on analysts' accounting expertise."

Problem1 : Walter is most accurate with respect to:

A. statement 1 only
B. statement 2 only
C. both statements 1 and 2

Reference no: EM132918620

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