Chapter 13: Business valuations

Question 1

Market capitalisation

Answer 1

: The total value of all the shares in a company.

Question 2

Takeover

Answer 2

: The acquisition by a company of a controlling interest in the voting share capital of another company, usually achieved by the purchase of a majority of the voting shares.

Question 3

The efficient market hypothesis:

Answer 3

A rationale for explaining how share prices react to new information about a company, and when any such change in share price occurs. Stock market reaction to new information depends on the strength of the stock market’s efficiency.