Question 1

A major issue in many fair value cases is:

Options :

A : Whether or not discounts and/or premiums are applicable

B : Lack of control

C : Lack of marketability

D : lack of ownership control premiums under certain specific circumstances.

Answer: A

Question 2

Discounts for contingent liabilities can cover a wide range of spectrum, such as:

Options :

A : Environmental liabilities

B : Pending lawsuits

C : Liability for controlling ownership interest

D : Both A and B

Answer: D

Question 3

Based on the purpose and objective of the valuation, the analyst will apply the appropriate standard of value to the subject equity interest. The standard of value for the individual assets and liabilities may be different from the standard of value for the subject equity interest. For example:

Options :

A :

The analyst may apply the fair market value standard to the individual assets and

liabilities even though a different standard of value is determined for the subject equity interest

B : The asset accumulation method will typically indicate the value of 100 percent of the subject company

C : The analyst may apply the fair market value standard to corporate assets even though the same standard of value is determined for the subject equity interest

D : The analyst can apply the ''axiomatic assets minus liabilities'' to indicate the value of the subject business enterprise

Answer: A

Question 4

Several factors influence __________________, particularly:

1. The proximity of the valuation date to the fiscal year-end

2. The quality of the interim statements

3. The importance of seasonality to the subject company

4. The extent to which information in interim statements is likely to affect the affect the conclusion

Options :

A : Usefulness of interim statements

B : Financial schedules

C : Federal tax returns

D : Audited statements

Answer: A

Question 5

The analyst should be curious about the proprietary products and services, especially:

Options :

A : Benefits attributable to brand name, trademarks copyrights or patents

B : Favorable supplier contracts

C : The unique characteristics that generate a comparative advantage over their competition

D : Intangible assets

Answer: C