CVA Online Practice Questions and Answers

Control shares are normally more valuable than minority shares because they contain a bundle of rights that minority shares do not enjoy. Below is a list of some of the rights. Which of the following is NOT out of such rights?

A. Appoint or change operational management

B. Determine management compensation and prerequisites

C. Set operational and strategic policy and change the course of business

D. Negotiate and consummate goodwill

Supermajority vote requirements and state dissolution statues are the factors that influence:

A. Swing vote

B. Blocking power

C. Lack of control discount

D. Ultimate rate of return produced by the interest.

The most common forms of redemption provisions found in privately held companies are as follows. Which of the following is NOT out of the common forms of redemption provisions?

A. The entire issue is redeemable at the option of the issuing corporation at a specified price over a designated time period. These types of issue are commonly referred to as callable.

B. The entire issue is redeemable at the option of the issuing corporations at a changing price contingent upon a certain event.

C. Future redemption by the issuing company is mandatory and based on a specific redemption schedule.

D. Future issues have sinking funds provisions similar to vehicle by which bonds are retired at intervals up to their maturity dates and are referred to as sinking fund preferred.

Which one of the following is/are example/s of normalizing adjustments?

A. Adequacy of allowance and reserve accounts

B. Non-depreciation methods and schedules

C. Policies regarding capitalization or expensing of various costs (adjust to industry norms)

D. Changes in capital structure

An item that frequently causes controversy in a business valuation is the value of a:

A. Net operating loss carryforward

B. Accounting of leases

C. Installment sales

D. Contract work

It is possible (although not very common) for a security to have a negative beta (i.e. a beta less than zero). Such a beta would indicate that:

A. It is the result of aggressive securities

B. Betas for small and publicly traded companies are often unreliable

C. The returns of these securities are countercyclical to the returns of the board investment market index.

D. Risk-free return would be greater

Some companies' articles of incorporation have provisions that if majority shares are sold in a change of control transactions, the majority shareholders must be offered the same price. This relates to:

A. Blocking power

B. Coattail protection

C. Supermajority vote

D. State dissolution statutes

Which of the following attribute should be there for an intangible asset to exist from an economic perspective?

A. It should be subject to legal existence and protection

B. It should be subject to specific identification and recognizable description

C. It should be subject to right of private ownership

D. All of these

Because of the advanced features (protected by the several patents), Seller management estimates that:

A. Seller sells more widgets than it otherwise would

B. Seller has a greater market share than it otherwise would

C. Seller's average selling price per unit is higher than its competitors' prices

D. Seller has short-term supply contract supply contract with the key supplier

There are some allowable methods for determining the basis of property received in exchange for other property. Which of the following is/are out those methods?

A. Income basis of tax on the property

B. If a taxpayer receives property for services, then the original basis of the property when it is received is its original price

C. The basis is the fair market value of the property exchanged for it, increased by any payments made or decreased by any payments received, when the two properties are of unequal value

D. The basis is the fair market value of the property when it is received