Financial Valuation

Question 1

Under U.S. GAAP, ___ ___ in an ___ market are the best evidence of value.

Answer 1

quoted prices in an active market

Question 2

___ ____ provides guidelines for the valuation process.

Answer 2

U.S. GAAP

Question 3

It may be appropriate to adjust level ___ inputs in the U.S. GAAP hierarchy of inputs when using those inputs for valuation purposes.

Answer 3

2

Question 4

The use of discounted expected cash flows to determine fair value would be an___ approach to valuation.

Answer 4

income

Question 5

Quoted prices for similar assets in an active market are level __ inputs in the U.S. GAAP hierarchy of inputs for valuation purposes.

Answer 5

2

Question 6

Quoted prices in markets that are not active are level __ inputs in the U.S. GAAP hierarchy of inputs for valuation purposes.

Answer 6

2

Question 7

Level __ of the U.S. GAAP hierarchy of inputs for valuation purposes is the lowest level of inputs identified by U.S. GAAP.

Answer 7

3

Question 8

Interest rates could be level ___ inputs in the U.S. GAAP hierarchy of inputs for valuation purposes.

Answer 8

2

Question 9

Most valuation has elements of both ___(___ ___) and ___ (____ ___)

Answer 9

science (objective characteristics); art/judgement (subjective characteristics)

Question 10

Level 2 of the U.S. GAAP hierarchy of inputs for valuation purposes is based on ___ inputs.

Answer 10

observable

Question 11

Using actual sales prices for real estate transactions as a basis for valuing a piece of real estate would be a ____ approach to valuation.

Answer 11

market

Question 12

An ____ ____ is the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

Answer 12

exit price

Question 13

Under U.S. GAAP, valuation should be based on an ___ price, but not an ___ price.

Answer 13

exit; entry

Question 14

Level 3 of the U.S. GAAP fair value framework consists of inputs that are ___ ___ but are based on an entity’s ___ and ___.

Answer 14

not observable; assumptions; estimates

Question 15

Level 1 of the U.S. GAAP fair value framework consists of ___ ___ ___ in active markets for ____ assets or liabilities.

Answer 15

quoted market prices; identical

Question 16

Level 2 of the U.S. GAAP fair value framework consists of inputs that are either directly or indirectly____, including:
1. Quoted prices for _____ items in ____ markets and in markets that are___;
2. Quoted prices for ___ ___ in ___markets;
3. Observable inputs other than quoted prices;
Inputs not directly observable but which are derived from or corroborated by observable market data.

Answer 16

observable; similar; active; inactive; identical items in inactive