CBV Theory Latest Exam Questions With Complete Solutions!!!
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Course
CBV - Chartered Business Valuator
Institution
CBV - Chartered Business Valuator
What is a valuation report and its standard? - ANS Standard 110
Three types, comprehensive, estimate and calculation.
They all provide conclusion about the value of shares, assets, or an interest in a business.
As a valuation report can be used in court, it would be better to use t...
CBV Theory Latest Exam Questions With
Complete Solutions!!!
What is a valuation report and its standard? - ANS Standard 110
Three types, comprehensive, estimate and calculation.
They all provide conclusion about the value of shares, assets, or an interest in a business.
As a valuation report can be used in court, it would be better to use the calculation valuation
report as it is a higher degree of precision.
Or for income tax transaction, a comprehensive valuation report is enough.
What is an advisory report and its standard? When do you use it? - ANS Standard 210.
You are hired as a non-independent advocate/advisor (advise a client on the value of a
business)
Use when one wants to purchase or sell shares, assets, or business interests.
Is liable when one party might rely on the valuation under the concept of professional liability for
negligence or fraud.
What is an expert report and its standard? - ANS Standard 310
You are hired to deal with quantification of economic losses as a result of a financial gain or
loss.
You may be asked to testify in court.
You must also comply with Standard 110, 120, and 130. Practice Standards for Valuation
Reports.
What is a limited critique report, its standard and when do you use it? - ANS Standard 410
Use to provide comments on the valuation, the advisory or the expert report when it is already
done.
, Often, they are used to check expert reports to find holes in court in a litigation context.
What are the basic requirements for standard 110, 210, 310, 410? - ANS 1. Introduction
2. Definitions
3. Scope of review: what information is used to arrive to a conclusion
4. Scope limitations: what was not possible to be addressed.
5. Methodology: detailed description of how the valuator arrived at a conclusion
6. Restrictions and qualifications: regulations; uncertainties and exceptions made in the report.
7- Conclusion
8. Identification of the CBV: CBV must be identified for litigation purposes.
What is a fairness opinion report, its standard and when do you use it? - ANS Standard
510. It is a report to conclude on the fairness of a proposed transaction on a financial point of
view.
The requirements:
1- Description of the transactions
2- Description of the relationship between the valuator and the interest party
3- Details coming from the Expert Reports that was considered in the fairness report.
Is used when a public company might look to go back to private.
What is a investment entity review report? its standard and when do you use it? - ANS
Standard 610, when an independent 3rd party is required to review the investment team's
calculation.
For exemple, a private equity firm has a large portfolio and they are paid based on the
investment returns. The investment team might have incentive to value the company at a higher
price. Therefore, they require an independant report to make sure the report is appropriate.
What is FMV? - ANS FMV is defined in 6 terms.
The highest price;
Cash equivalents;
Acting at arm's length;
Open and unrestricted market;
Neither party is under compulsion to buy or sell;
Reasonable knowledge of the relevant facts.
Why would your FMV different from the price offered in X? And why could it vary? - ANS
FMV:
1- Highest price
2- Cash equivalents
3- At arm's length
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