Question 1

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 2

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

Question 3

The primary ownership interest characteristics that need to be addressed in almost every business valuation are the following EXCEPT:

Options :

A : Control or minority valuation basis (not necessarily a black-and--white issue ____there may be elements of control without absolute control

B : Degree of marketability

C : Fair market value

D : Fair market value on a nonmarketable, non-controlling ownership interest basis.

Answer: C,D

Question 4

It is possible to examine the uncertainty of income to the various suppliers of capital by investigating the uncertainty of income to the company. The greater the uncertainty of income to the company:

Options :

A : The greater the uncertainty of the income to the investor in the company

B : The lesser the uncertainty of the equity to the investor in the company

C : The greater the uncertainty of the equity to the investor in the company

D : The lesser the uncertainty of the income to the investor in the company

Answer: A

Question 5

When is the guideline merged and acquired company method most useful?

Options :

A : The initial value derived from the guideline merged and acquired company method, before adjustment for factors such as size of subject block and degree of marketability, is an indication of transaction prices of major ownership interest, usually controlling ownership interests.

B : When same acquisition target has different buyers both due to perception and reality

C : At the time of achieving synergies

D : In estimation of enterprise value

Answer: A

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