The Cost Approach to Determining Fair Value Involves

question 32

Multiple Choice

The cost approach to determining fair value involves:

• A) determining an amount which reflects the amount currently needed to replace the service capacity of an asset.
• B) using prices generated by market transactions involving identical or comparable assets or liabilities.
• C) converting future amounts such as cash flows to a current, discounted amount.
• D) none of the above.

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Definitions:

Securities and Exchange Commission

This is an independent federal government agency responsible for protecting investors, maintaining fair and orderly functioning of securities markets and facilitating capital formation.

Preliminary Registration Statement

A document submitted to regulatory authorities prior to a securities offering that provides details about the offering and the issuer.

Exchange

A marketplace where securities, commodities, derivatives, and other financial instruments are traded.

Rate of Return

The percentage gain or loss on an investment over a specified period, expressing the compound annual growth rate.