Advanced D P Chapter One Chapter Review
Advanced Discounts and Premiums
OVERVIEW AND REVIEW
ADVANCED DISCOUNTS AND PREMIUMS CHAPTER 1 REVIEW QUESTIONS
© 2003–2014 Robert J. Grossman and National Association of Certified Valuators and Analysts 2014.v1
Chapter One – 11
OVERVIEW AND REVIEW
Advanced Discounts and Premiums
ADVANCED DISCOUNTS AND PREMIUMS CHAPTER REVIEW QUESTIONS Chapter 1: Overview and Review of Fundamentals—Discounts and Premiums 1.
When applying both a discount for lack of control and a discount for lack of marketability: a. b. c. d.
2.
Which of the following fundamental concepts of discounts and premiums are INCORRECT? a. b. c. d.
3.
True False
What circumstances permit the additive application of the DLOC and DLOM? a. b. c. d.
5.
Fair market value is determined by transactions between buyers and sellers No prescribed levels or ranges of discounts or premiums exist from which the valuator can ascertain the proper discount for a given case The discounts for lack of control and lack of marketability are mutually exclusive Investors are risk averse
The three basic levels of value for fair market value valuations include controlling interest value, marketable minority interest value, and non-marketable minority interest value. a. b.
4.
The discounts are added together and then applied to the “pre-discounted” value of the ownership interest under valuation The application of the discounts is multiplicative, not additive. The discount for lack of control is applied first The application of the discounts is multiplicative, not additive Both b and c
There are no circumstances permitting the additive application of discounts When the DLOM is applied prior to the DLOC When the DLOC is applied prior to the DLOM All circumstances require the addition of all applicable discounts
The highest level of value is synergistic value. What sets this level of value apart from the other three levels of value? a. b. c. d.
The fact that a second control premium needs to be applied to get from a control, marketable value to a synergistic value The synergistic value assumes a different standard of value Synergistic value assumes a control non-marketable value It is the only level of value not accepted by the IRS for gift and estate valuations
12 – Chapter One
© 2003–2014 Robert J. Grossman and National Association of Certified Valuators and Analysts 2014.v1
OVERVIEW AND REVIEW
ADVANCED DISCOUNTS AND PREMIUMS CHAPTER 1 REVIEW QUESTIONS
© 2003–2014 Robert J. Grossman and National Association of Certified Valuators and Analysts 2014.v1
Chapter One – 11
OVERVIEW AND REVIEW
Advanced Discounts and Premiums
ADVANCED DISCOUNTS AND PREMIUMS CHAPTER REVIEW QUESTIONS Chapter 1: Overview and Review of Fundamentals—Discounts and Premiums 1.
When applying both a discount for lack of control and a discount for lack of marketability: a. b. c. d.
2.
Which of the following fundamental concepts of discounts and premiums are INCORRECT? a. b. c. d.
3.
True False
What circumstances permit the additive application of the DLOC and DLOM? a. b. c. d.
5.
Fair market value is determined by transactions between buyers and sellers No prescribed levels or ranges of discounts or premiums exist from which the valuator can ascertain the proper discount for a given case The discounts for lack of control and lack of marketability are mutually exclusive Investors are risk averse
The three basic levels of value for fair market value valuations include controlling interest value, marketable minority interest value, and non-marketable minority interest value. a. b.
4.
The discounts are added together and then applied to the “pre-discounted” value of the ownership interest under valuation The application of the discounts is multiplicative, not additive. The discount for lack of control is applied first The application of the discounts is multiplicative, not additive Both b and c
There are no circumstances permitting the additive application of discounts When the DLOM is applied prior to the DLOC When the DLOC is applied prior to the DLOM All circumstances require the addition of all applicable discounts
The highest level of value is synergistic value. What sets this level of value apart from the other three levels of value? a. b. c. d.
The fact that a second control premium needs to be applied to get from a control, marketable value to a synergistic value The synergistic value assumes a different standard of value Synergistic value assumes a control non-marketable value It is the only level of value not accepted by the IRS for gift and estate valuations
12 – Chapter One
© 2003–2014 Robert J. Grossman and National Association of Certified Valuators and Analysts 2014.v1
