Certified Valuation Analyst Business Valuation Concepts 2

Question 1

Which standard of value assumes a hypothetical willing buyer and willing seller, neither under compulsion and both reasonably informed?

Accepted Answer

Fair market value

Answer

Investment value

Answer

Intrinsic value

Answer

Liquidation value

Question 2

Investment value differs from fair market value primarily because it reflects:

Accepted Answer

The value to a specific owner or buyer

Answer

Forced-sale conditions

Answer

Only tangible asset book value

Answer

A court-mandated discount

Question 3

The premise of value that assumes the business will continue operating into the foreseeable future is:

Accepted Answer

Going concern

Answer

Orderly liquidation

Answer

Forced liquidation

Answer

Assemblage of assets

Question 4

Under a forced liquidation premise, value is typically LOWER than orderly liquidation because:

Accepted Answer

Assets are sold quickly with little marketing time

Answer

Goodwill is included

Answer

Tax shields are added

Answer

Synergies are captured

Question 5

Intrinsic (fundamental) value is best described as the value an analyst concludes based on:

Accepted Answer

Analysis of the company's true underlying characteristics

Answer

The last transaction price

Answer

Replacement cost of fixed assets only

Answer

The seller's asking price

Question 6

Which document is the foundational IRS guidance listing the eight factors to consider in valuing closely held stock?

Accepted Answer

Revenue Ruling 59-60

Answer

ASC 805

Answer

IRC Section 1031

Answer

SSVS No. 1

Question 7

The level of value representing a noncontrolling interest in a privately held company, after both a control and marketability adjustment, is the:

Accepted Answer

Nonmarketable minority interest level

Answer

Control marketable level

Answer

Strategic control level

Answer

As-if-freely-traded minority level