NACVA FINAL
A - Answer 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 - Answer 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 - Answer 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 - Answer 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 - Answer 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 - Answer The completed transaction method emphasizes the principle of which of the
following?
a. Multicollinearity
b. Substitution
c. Multiplication
d. Multiplication and substitution
,D - Answer 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 - Answer 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 - Answer 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 - Answer 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 - Answer Pratt's Stats consists of primarily which type of transaction?
a. Contingent sales
b. Liquidation sales
c. Equity sales
d. Asset sales
C - Answer 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 - Answer 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 - Answer 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 - Answer The indicated value before adjustments derived from multiples using
IBA/ADAM data is generally considered to be a
a. Control, marketable value
b. Control, non-marketable value
c. Minority, marketable value
d. Minority, non-marketable value
A - Answer The majority of the observations in S&P Capital IQ are what type of
transaction?
a. Equity sales
b. Contingent sales
c. Liquidation sales
d. Asset sales
A - Answer Which contains public company equity transaction information?
a. Yahoo! Finance
b. BIZCOMPS
c. Pratt's Stats
d. All of the above
D - Answer One of the advantages of the Guideline Public Company Method is that
a. The values derived are inclusive of market and economic factors as of the valuation
date based on independent arms-length activity
b. The degree of adjustment when valuing similar minority interests in large privately-
held entities can often times be reduced to considerations for lack of marketability
c. The underlying data is considered to be fairly reliable given the degree of scrutiny
publicly traded companies must undergo
d. All of the above
A - Answer 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 - Answer 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 - Answer 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 - Answer 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 - Answer 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 - Answer The completed transaction method emphasizes the principle of which of the
following?
a. Multicollinearity
b. Substitution
c. Multiplication
d. Multiplication and substitution
,D - Answer 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 - Answer 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 - Answer 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 - Answer 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 - Answer Pratt's Stats consists of primarily which type of transaction?
a. Contingent sales
b. Liquidation sales
c. Equity sales
d. Asset sales
C - Answer 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 - Answer 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 - Answer 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 - Answer The indicated value before adjustments derived from multiples using
IBA/ADAM data is generally considered to be a
a. Control, marketable value
b. Control, non-marketable value
c. Minority, marketable value
d. Minority, non-marketable value
A - Answer The majority of the observations in S&P Capital IQ are what type of
transaction?
a. Equity sales
b. Contingent sales
c. Liquidation sales
d. Asset sales
A - Answer Which contains public company equity transaction information?
a. Yahoo! Finance
b. BIZCOMPS
c. Pratt's Stats
d. All of the above
D - Answer One of the advantages of the Guideline Public Company Method is that
a. The values derived are inclusive of market and economic factors as of the valuation
date based on independent arms-length activity
b. The degree of adjustment when valuing similar minority interests in large privately-
held entities can often times be reduced to considerations for lack of marketability
c. The underlying data is considered to be fairly reliable given the degree of scrutiny
publicly traded companies must undergo
d. All of the above
