Question 1

Any Buy-Sell agreement, restrictions, or other similar factor relating to the right to use or sell the property will be ignored for estate gift, and generation skipping tax purposes unless the agreement meets any of the following test EXCLUDING:

Options :

A : It is a bona fide business arrangement

B : It must be a device to transfer the property to the natural objects of the transferor-s bounty (such as family members) for less than adequate and full consideration in money or money-s worth

C : Its terms must be comparable to similar arrangements entered into by persons in an arm-s length transaction

D : It is a key player in Buy-Sell arrangements

Answer: D

Question 2

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

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 andliabilities 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

The most frequently encountered reasons for needing to value debt securities are the following EXCEPT:

Options :

A : Purchase or sale for cash

B : Exchange of equity for debt, or vice versa

C : Allocating total enterprise value among classes of securities in a leverages buyout, recapitalization (including)

D : Adjusting an equity statement owned or owed

Answer: D

Question 5

A series of small stock premium studies have been developed by Roger Grabowski and David King. They use eight different measures of size for two major groups (Equity size and Company size). Which of the following is/are measure/s of company size?

Options :

A : Market value of common equity

B : Book value of common equity

C : Market value of invested capital

D : Number of employees

Answer: C,D

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