Question 1

Market evidence indicated that adjustable-rate preferred stocks generally required yields in the range of ______________ basic points.

Options :

A : 42 to 445

B : 48-498

C : 32-500

D : 50-500

Answer: A

Question 2

Since the use of the extraordinary designation is so restrictive, obviously many items do not meet the strict definition for accounting purposes but nevertheless should be regarded as nonrecurring for analytical purposes. Some examples of such items would be all of the following EXCEPT:

Options :

A : Gains or losses on the sale of assets

B : Gains or losses on disposition of a segment of the business

C : Write-offs and other expenses related to an acquisition

D : Effects of normal price fluctuations

Answer: D

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

Which one of the following is/are example/s of normalizing adjustments?

Options :

A : Adequacy of allowance and reserve accounts

B : Non-depreciation methods and schedules

C : Policies regarding capitalization or expensing of various costs (adjust to industry norms)

D : Changes in capital structure

Answer: A,C

Question 5

____________ is perhaps the most difficult task for the business appraiser.

Options :

A : Getting two or more parties with different economic and business expectations to agree on projected future benefits and the risks associated with achieving those projections.

B : Identification of partial interest.

C : Selection of enterprise value premise.

D : Estimation of invested capital

Answer: A