Trading Comps Limitations

This question practices your understanding of how trading comps work and where they can break down. In an interview, bankers want to know that you understand the importance of selecting truly comparable public companies, adjusting for business differences, and recognizing that market prices can be influenced by sentiment, liquidity, and other factors that may distort valuation benchmarks. It also tests whether you can think critically about relative valuation instead of treating market multiples as automatically reliable.