Advanced D P Chapter Seven Review Questions
Advanced Discounts and Premiums
A CRITICAL LOOK AT EMPIRICAL STUDIES
ADVANCED DISCOUNTS AND PREMIUMS CHAPTER 7 REVIEW QUESTIONS
© 2003–2014 Robert J. Grossman and National Association of Certified Valuators and Analysts 2014.v1
Chapter Seven – 21
A CRITICAL LOOK AT EMPIRICAL STUDIES
Advanced Discounts and Premiums
ADVANCED DISCOUNTS AND PREMIUMS CHAPTER REVIEW QUESTIONS Chapter 7: A Critical Look at Empirical Studies to Support a Discount for Lack of Marketability 1.
Which of the following studies is NOT a restricted stock study? a. b. c. d.
2.
The purpose of the Rule 144 changes adopted by the SEC on February 15, 2008, with respect to the holding period requirement for restricted stock is to improve liquidity of restricted securities and decrease the cost of capital. a. b.
3.
FMV Opinions Study (2001) and Management Planning Study (2000) Willamette Management Associates Studies and Emory (Dot-Com) Studies The Johnson Study (1999) and the Robert W. Baird & Co. Studies (The Emory Studies) Hall & Polacek Study (1994) and Moroney Study (1973)
The restricted stock studies average of 35% indicates a valuation analyst can just use this discount and be safe. a. b. c. d.
5.
True False
Which restricted stock studies included analysis of tax court decisions? a. b. c. d.
4.
Gelman Study Moroney Study Emory Studies Maher Study
Yes. The studies were done by well-known entities, including the SEC, and as such can be trusted by the valuation analyst and report receiver to be accurate. No. Not all the studies are published, and therefore, those numbers must be deleted from what the valuation analyst uses. Yes. The studies are updated periodically, so the average is current and applicable to today’s valuations. No. Due to recent challenges by the Internal Revenue Service and tax court decisions, the average rate of 35% may be used as a starting point for the valuator. The valuator should apply current case law, such as Mandelbaum, and or IPO studies to provide additional support to the discount applied.
Which restricted stock study included analysis of Tax Court opinions? a. b. c.
Hall & Polacek Study Emory (Dot-Com) Studies Coolidge Study
22 – Chapter Seven
© 2003–2014 Robert J. Grossman and National Association of Certified Valuators and Analysts 2014.v1
A CRITICAL LOOK AT EMPIRICAL STUDIES
ADVANCED DISCOUNTS AND PREMIUMS CHAPTER 7 REVIEW QUESTIONS
© 2003–2014 Robert J. Grossman and National Association of Certified Valuators and Analysts 2014.v1
Chapter Seven – 21
A CRITICAL LOOK AT EMPIRICAL STUDIES
Advanced Discounts and Premiums
ADVANCED DISCOUNTS AND PREMIUMS CHAPTER REVIEW QUESTIONS Chapter 7: A Critical Look at Empirical Studies to Support a Discount for Lack of Marketability 1.
Which of the following studies is NOT a restricted stock study? a. b. c. d.
2.
The purpose of the Rule 144 changes adopted by the SEC on February 15, 2008, with respect to the holding period requirement for restricted stock is to improve liquidity of restricted securities and decrease the cost of capital. a. b.
3.
FMV Opinions Study (2001) and Management Planning Study (2000) Willamette Management Associates Studies and Emory (Dot-Com) Studies The Johnson Study (1999) and the Robert W. Baird & Co. Studies (The Emory Studies) Hall & Polacek Study (1994) and Moroney Study (1973)
The restricted stock studies average of 35% indicates a valuation analyst can just use this discount and be safe. a. b. c. d.
5.
True False
Which restricted stock studies included analysis of tax court decisions? a. b. c. d.
4.
Gelman Study Moroney Study Emory Studies Maher Study
Yes. The studies were done by well-known entities, including the SEC, and as such can be trusted by the valuation analyst and report receiver to be accurate. No. Not all the studies are published, and therefore, those numbers must be deleted from what the valuation analyst uses. Yes. The studies are updated periodically, so the average is current and applicable to today’s valuations. No. Due to recent challenges by the Internal Revenue Service and tax court decisions, the average rate of 35% may be used as a starting point for the valuator. The valuator should apply current case law, such as Mandelbaum, and or IPO studies to provide additional support to the discount applied.
Which restricted stock study included analysis of Tax Court opinions? a. b. c.
Hall & Polacek Study Emory (Dot-Com) Studies Coolidge Study
22 – Chapter Seven
© 2003–2014 Robert J. Grossman and National Association of Certified Valuators and Analysts 2014.v1
