NACVA NACVA Certifications CVA Questions & Answers

• Question 61:

  Discounts for contingent liabilities can cover a wide range of spectrum, such as:

  A. Environmental liabilities

  B. Pending lawsuits

  C. Liability for controlling ownership interest

  D. Both A and B

  Correct Answer: D

• Question 62:

  ____________ is the flip side of discounts, which can be added for a variety of factors, such as control, industry risk, or a swing vote.

  A. Premiums

  B. Combined discounts

  C. Contingent liability discounts

  D. Blockage discounts

  Correct Answer: A

• Question 63:

  ___________ may apply to publicly traded stock where the size of the block is large enough relative to normal trading volume that it could not be sold in a short time without depressing the market price.

  A. Discounts for lack of control

  B. Blockage discounts

  C. Discounts for lack of marketability

  D. Contingent liability discounts

  Correct Answer: B

• Question 64:

  There is no set of number guideline companies to use. However, the more data there are about each company and the greater the similarity between the subject company and the companies chosen as guideline companies, the ______ guideline companies will pass muster.

  A. Greater

  B. Fewer

  C. Average

  D. Depends on selection procedures and industry type

  Correct Answer: A

• Question 65:

  The court's acceptance, rejection, or relative weight accorded to various valuation approaches and methods generally revolves around some factors. Which of the following are NOT out of those factors?

  A. The type of company

  B. The quality of available evidence relevant to the respective methods

  C. The prospects for liquidation or continued operations

  D. The subject company's industry norms

  Correct Answer: D

• Question 66:

  Some companies' articles of incorporation have provisions that if majority shares are sold in a change of control transactions, the majority shareholders must be offered the same price. This relates to:

  A. Blocking power

  B. Coattail protection

  C. Supermajority vote

  D. State dissolution statutes

  Correct Answer: B

• Question 67:

  The application of any discounts should always be taken in the context of:

  A. The level of value that is taken from

  B. The legal documents that control the rights and restrictions of the interest holder

  C. The ultimate rate of return produced for the interest

  D. A, B, C

  Correct Answer: D

• Question 68:

  If one assumes that the business will continue indefinitely as a viable going concern after the number of years for which discrete projections were made, the procedure/s commonly used to estimate the terminal value at the end of discrete projection period is/are:

  A. Capitalization of ongoing economic income

  B. An estimated market multiple of the economic income projected for the last year of the discrete projection period

  C. Discounted net cash flow available to equity

  D. Perpetual growth model using net flow available to equity

  Correct Answer: AB

• Question 69:

  Regulated companies usually are regulated because they have a captive market and are in a monopoly position to supply a needed service; thus, their cost of capital should be considerably________ that that for an average company

  A. Lower

  B. Higher

  C. Same

  D. It depends

  Correct Answer: A

• Question 70:

  The fundamental risk measures and their correlation coefficient with observed equity risk premiums are as follows EXCLUDING:

  A. Operating margin

  B. Volatility of earnings or cash flows

  C. Coefficient of variation of return on book value of equity

  D. Coefficient of variation of operating margins

  Correct Answer: B