Question 1

The discount rate is a market-driven rate. It represents the expected yield rate-or rate of return-necessary to induce:

Options :

A : Investors to commit available funds to the subject investment, given its level of risk

B : Yield rate

C : Dividends

D : Investment yield

Answer: A

Question 2

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 3

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 4

____________ indicates that the collective going-on concern value of the total subject entity is less than the sum of the individual values of the entity's total tangible assets.

Options :

A : Goodwill

B : Positive goodwill

C : Negative goodwill

D : Trademarks

Answer: C

Question 5

The FASB says that, for ''unobservable inputs,'' the valuation should include market participant assumptions about risk, even if this adjustment is different to determine. Interestingly, it breaks risk into following categories EXCEPT:

Options :

A : The risk inherent in a particular valuation technique

B : The risk inherent in inputs of the valuation technique

C : The explicit risk related to a particular valuation technique

D : The implicit risk related to a particular valuation technique

Answer: C,D

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