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Financial ABV Exam
Accredited in Business Valuation (ABV) (Page 12 )

Updated On: 12-Jan-2026
Page 12 of 70
PDF with 344 Questions

The application of any discounts should always be taken in the context of:

  1. The level of value that is taken from
  2. The legal documents that control the rights and restrictions of the interest holder
  3. The ultimate rate of return produced for the interest
  4. A, B, C

Answer(s): D



If one assumes that the business will continue indefinitely as a viable going concern after the number of years for which discrete projections were made, the procedure/s commonly used to estimate the terminal value at the end of discrete projection period is/are:

  1. Capitalization of ongoing economic income
  2. An estimated market multiple of the economic income projected for the last year of the discrete projection period
  3. Discounted net cash flow available to equity
  4. Perpetual growth model using net flow available to equity

Answer(s): A,B



Regulated companies usually are regulated because they have a captive market and are in a monopoly position to supply a needed service; thus, their cost of capital should be considerably that that for an average company

  1. Lower
  2. Higher
  3. Same
  4. It depends

Answer(s): A



The fundamental risk measures and their correlation coefficient with observed equity risk premiums are as follows EXCLUDING:

  1. Operating margin
  2. Volatility of earnings or cash flows
  3. Coefficient of variation of return on book value of equity
  4. Coefficient of variation of operating margins

Answer(s): B



The direction and magnitude of the company-specific risk premium may be based on an analysis of the some factors. Which of the following is/are out of such factors?

  1. Leverage
  2. Size
  3. Level of current competition
  4. Industry risk

Answer(s): A,B,D



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