NACVA FINAL EXAM QUESTIONS

NACVA FINAL EXAM QUESTIONS A - ANS - The market approach is frequently referred to by what other professional discipline's approach? a. Sales comparison approach used by realtors b. Automotive dealer "best deal" appr ...

NACVA FINAL EXAM QUESTIONS A - ANS - The market approach is frequently referred to by what other professional discipline's approach? a. Sales comparison approach used by realtors b. Automotive dealer "best deal" approach c. Broker's Commodity pricing model d. Black Scholes valuation methodology D - ANS - In order to convert a Market Value of Invested Capital to an Equity Value, the valuation professional must do which of the following? a. Add the value of working capital b. Add the value of working capital and subtract all debt c. Add the value of working capital excluding inventory and subtract all debt d. None of the above C - ANS - Which of the following statements about the Harmonic Mean is correct? a. Calculated by taking the average of the median and the mean b. Calculated by taking the average of the median, mean and mode c. A measure of central tendency that emphasizes an equal weighting of each observation d. A measure of central tendency that emphasizes an equal weighting of the mean, median, and mode D - ANS - Which of the following statements regarding standard deviation (σ) is correct? a. Standard deviation is the most frequently occurring observation in a dataset b. It increases as the number of observations increase c. It decreases as the disparity between observations is increased d. It is a measure of mathematical expression about the dispersion of a population to its mean C - ANS - All else equal, the valuation professional should select the multiple with a Coefficient of Variation: a. Equal to the subject's Beta b. Closest to the subject's beta c. Closest to zero d. Closest to the mean B - ANS - The completed transaction method emphasizes the principle of which of the following? a. Multicollinearity b. Substitution c. Multiplication d. Multiplication and substitution D - ANS - Common market value of invested capital (MVIC) multiples include: a. MVIC/Sales b. MVIC/EBITDA c. MVIC/Gross Profit d. Both A and B B - ANS - In order to maintain consistency across methodologies, a valuation professional should a. Always use the same multiple regardless of the database selected using the market Approach b. Consistently apply the same period interval (e.g. not applying a forward P/E to a three-year average of EBITDA) from the income approach to the market approach c. Always use the same database for all of his/her valuation projects d. Never average the results from the revenue multiple and the EBITDA multiple B - ANS - Without regard to issues of liquidity, the indicated value, before adjustments, derived from multiples using BIZCOMPS data is generally considered to be which of the following: a. Control, marketable value b. Control, non-marketable value c. Minority, marketable value d. Minority, non-marketable value D - ANS - The transaction prices in IBA/ADAM include the value of which of the following? a. Only fixtures and equipment b. Only business-related goodwill c. Debt d. A and B only D - ANS - Pratt's Stats consists of primarily which type of transaction? a. Contingent sales b. Liquidation sales c. Equity sales d. Asset sales C - ANS - The majority of the observations in Done Deals are what type of transaction? a. Contingent sales b. Liquidation sales c. Equity sales d. Asset sales B - ANS - BIZCOMPS transactions primarily consist of sales of a. Large publically traded entities b. Main street businesses such as restaurants, small retailers and other hard-to-find business c. Advertising agencies d. Insurance agencies e. All of the above f. C and D only F - ANS - The unadjusted transaction prices in BIZCOMPS includes the value of which of the following: a. Fixtures and equipment only b. Inventory only c. Business-related goodwill only d. Debt e. All of the above f. A and C only B - ANS - The indicated v