ASA Business Valuation Methods

Question 1

Which standard of value is most commonly used in US federal tax matters such as estate and gift tax valuations?

Accepted Answer

Fair market value

Answer

Investment value

Answer

Fair value

Answer

Intrinsic value

Question 2

In business valuation, the capitalization of earnings method involves dividing a benefit stream by which rate?

Accepted Answer

Capitalization rate

Answer

Discount rate

Answer

Weighted average cost of capital only

Answer

Price-earnings ratio

Question 3

Which business valuation approach estimates value based on the present value of future economic benefits?

Accepted Answer

Income approach

Answer

Asset approach

Answer

Market approach

Answer

Cost approach

Question 4

EBITDA is commonly used in business valuation as a proxy for:

Accepted Answer

Operating cash flow before capital structure and tax effects

Answer

Net income available to shareholders

Answer

Total enterprise debt obligations

Answer

Market capitalization of equity

Question 5

A control premium in business valuation represents:

Accepted Answer

Additional value paid to obtain a controlling interest

Answer

A discount for lack of marketability

Answer

The premium a public company trades above book value

Answer

An adjustment for above-market management compensation

Question 6

Which of the following is a form of the market approach in business valuation?

Accepted Answer

Guideline public company method

Answer

Discounted cash flow method

Answer

Adjusted net asset method

Answer

Capitalization of dividends method