Certified Valuation Analyst (CVA) Practice Exam

Which of the following are considered standards of value?

1. Investment value, Actual value, Fair market value, Fair value (state statutes)

2. Market value, Book value, Liquidation value, Fair market value

3. Rental value, Historical value, Adjusted value, Fair value (financial reporting)

4. Equity value, Present value, Residual value, Liquidation value

The correct answer is: Investment value, Actual value, Fair market value, Fair value (state statutes)

The identification of standards of value is crucial in business valuation as they represent different contexts in which a valuation may be performed. The correct answer lists investment value, actual value, fair market value, and fair value (as mandated by state statutes) as standards of value. Investment value is defined as the value of a business or asset to a particular investor based on specific investment requirements. Actual value refers to the underlying value of the asset in current market conditions, while fair market value is the price at which an asset would trade in a competitive auction setting. Fair value, particularly in the context of state statutes, often refers to value in the context of legal proceedings or specific financial reporting requirements, which may differ from other valuation contexts. The other choices involve terms that, while related to valuation, do not necessarily represent recognized standards of value across a broad range of contexts. For example, market value and book value are important financial metrics, but market value has a more specific application compared to fair market value. Liquidation value is a measure of the amount that could be derived from selling an asset in a forced sale, which is more specific than the broader definitions of fair market or investment value. By understanding these standards, practitioners can select the most appropriate valuation method for