Certified Valuation Analyst (CVA) Practice Exam

Which premise of value includes intrinsic value, going-concern value, and liquidation value?

1. Investment value

2. Market value

3. Value in exchange

4. Premise of value

The correct answer is: Premise of value

The premise of value that encompasses intrinsic value, going-concern value, and liquidation value typically refers to a broader categorization of how value is assessed under various circumstances. When discussing valuation, these terms represent different perspectives on how a business or asset might be valued in distinct situations. Intrinsic value reflects the inherent worth of an asset based on fundamental factors, regardless of market conditions. Going-concern value assumes that the business will continue to operate and factor in future earnings, making it particularly relevant in ongoing operations. Liquidation value, on the other hand, is focused on the potential sale of assets if the business is shut down. The term "premise of value" serves as an umbrella that includes these various valuation perspectives, illustrating different situations or assumptions that can impact the evaluation of an asset or business. This framework aids analysts in determining the most appropriate value conclusion for different scenarios based on the specific context of the valuation. The other options represent different viewpoints or types of value that do not encompass the full range of situations outlined in the question.