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NACVA Accredited Valuation Analyst Exam Questions 131–135 (page: 28)

Updated On: 9-Feb-2026

Income that is eventually derived from the qualified stock option (QSO) is determined to be ordinary income if the receipt exercises the option to buy the underlying securities and subsequently sells the securities within 12 months. To get a tax break:

  1. The owner must hold the shares for at least one year
  2. The reader should consult a tax advisor regarding any possible tax consequences
  3. Business valuation professional is to estimate the fair market value
  4. The ISO must have been granted at least two years before the stock is sold

Answer(s): A,D



Under the asset approach, the value of the corporation’s investment in common stock is the common stock’s fair market value on the valuation date:

  1. Less the potential income taxes payable on the sale of this stock
  2. Less the potential income taxes payable to hedge the stock
  3. Plus the potential income taxes payable on the sale of this stock
  4. Less the potential income taxes payable on short selling

Answer(s): A



___________ applies option pricing methods to value economic projects, companies, and financial securities. Just as option pricing models incorporate the filexibility of option holders’ decision as to whether and when to exercise an option by paying the exercise price.

  1. Corporation based valuation
  2. Valuing the built-in gains
  3. Return option valuation
  4. Real option valuation

Answer(s): D



One of the most controversial and unsettled issues in business valuation today is, the valuation of:

  1. Corporations
  2. C corporations
  3. S corporations
  4. MNCs

Answer(s): C



The purpose of Erickson and Wang study was to empirically quantify the increase in selling price realized by sellers of entire companies in cases where:

  1. The buyer realizes a step-up in tax basis of the underlying assets when acquiring a “seasoned” S corporation
  2. Most acquirers do not want to purchase stock of another corporation because of the potential for liability assumptions
  3. The step-up in tax basis of the assets result in an increase in proceeds
  4. The entire analysis should be based on entire data

Answer(s): A



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