CAIIB · Advanced Business & Financial Management · Module C — Valuation, Mergers & Acquisitions
CAIIB ABFM Unit 15 — Other Non-DCF Valuation Models: Free MCQs with Explanations
By Swarnakshi Jha (ex-banker) · Updated 29 October 2026 · Paper III of the December 2026 cycle (Sunday 13 December 2026)
This is the free practice page for CAIIB ABFM Unit 15 — Other Non-DCF Valuation Models (Module C — Valuation, Mergers & Acquisitions). The CAIIB Mock Centre holds 141 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five practice questions with explanations, and the traps that cost marks.
ABFM · Module C141 MCQs in the Mock Centre5 free belowPaper on 13 December
Key facts examiners test from this unit
Relative valuation and its steps — value an asset from the current prices of comparable assets, standardised as multiples.
Equity multiples: P/E, P/B and P/S — equity multiples price shares per rupee of earnings, book value or sales.
Modified and relative multiples — divide a multiple by its companion variable, or by the market's multiple, to compare fairly.
Changed since the textbook
International Valuation Standards 2025: market approach in IVS 103; data and models standards (31 January 2025). The International Valuation Standards effective 31 January 2025 set out the market, income and cost approaches in IVS 103 Valuation Approaches; the market approach values an asset from prices of identical or comparable assets, adjusted for differences, typically through comparable transactions and guideline publicly traded comparables. New general standards IVS 104 Data and Inputs and IVS 105 Valuation Models require the data and models used, including any multiples, to be relevant and fit for purpose, with their limits understood. Source: IVSC
IPO 'basis for issue price': KPIs, listed-peer comparison and past transaction prices (21 November 2022). SEBI's ICDR amendment notified on 21 November 2022 requires the 'basis for issue price' section of an offer document to disclose the key performance indicators (KPIs) shared with investors in the previous three years, a comparison with Indian or global listed peers of comparable size, industry and business model, and the price per share in primary and secondary transactions of the previous 18 months, with the weighted average cost of acquisition compared with the floor and cap prices in the price-band advertisement. Source: Khaitan & Co
5 free practice questions — tap an option
Five practice questions from this unit. Answers lock on the first tap, exactly as in the exam, and an explanation opens underneath. The Mock Centre has all 141 questions on this unit, from easy to tough, with caselets and key-in numericals, why every other option is wrong and the exam tip — and tracks your score and revision dates.
Question 1 of 5
Which is a merit of the P/B multiple over the P/E multiple?
Why (a): The textbook says book value is almost always positive and steadier than EPS, so P/B can be used when EPS is negative or volatile. (b) is wrong: Intangibles are missing from book value. (c) is wrong: Book value is at historical cost. (d) is wrong: Asset needs differ by business model.
Question 2 of 5
Which is a reason analysts give for using the P/S multiple?
Why (a): The textbook says sales are less susceptible to manipulation, stay positive when EPS or book value is negative, and are steadier than EPS. (b) is wrong: No such rule holds. (c) is wrong: Sales are not an asset value. (d) is wrong: Sales do move with the cycle, though less than profits.
Question 3 of 5
Why is cash deducted from enterprise value when computing the EV/EBITDA multiple?
Why (a): Enterprise value is meant to match EBITDA, which is operating income; since EBITDA leaves out the income earned on cash, cash is deducted from EV so that numerator and denominator cover the same operating business. Cash belongs to the firm's owners, not its lenders, and EBITDA contains no working-capital items. (b) is wrong: EBITDA contains no working-capital items. (c) is wrong: Cash belongs to the firm's owners, not its lenders. (d) is wrong: The balance at the valuation date is known; uncertainty is not the reason.
Question 4 of 5
What is the conventional method of choosing a multiple?
Why (b): The conventional (standard) method uses the multiple that has become the most frequently used for a given setting or industry. (a) is wrong: That is the statistical method. (c) is wrong: That is the cynical view. (d) is wrong: That is the fundamental method.
Question 5 of 5
Why does the replacement-cost revision value finished goods at realisable price less selling costs, but raw materials at their latest purchase cost?
Why (a): The revision values each item at what it is worth to the firm now: finished goods will be sold, so their value is the expected price less packing, transport, selling and collection costs; raw materials would be bought again, so their latest acquisition cost applies. (b) is wrong: Tax is not the reason for the basis. (c) is wrong: Counting is not the issue. (d) is wrong: The revision departs from historical cost on purpose.
0 of 5 answered.
Traps in this unit
Divide by the number of peers, not one less.
Unadjusted comparables mislead.
No P/E for negative EPS.
Practise all 141 questions on Unit 15. The free CAIIB demo opens Units 1–2 of every paper with full explanations; the ABFM Online Mock Centre unlocks all 4,000+ ABFM questions, the full-length papers with caselets and key-ins, module mocks and Smart Revision for 18 months (₹1,499).
Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. CAIIB content follows rules and developments up to IIBF's cut-off of 30 June 2026 (where a rule changed later, the update box says so); verify from official sources before relying on them in practice.