Which of the Following Is True Regarding the Traditional Approach

question 37

Multiple Choice

Which of the following is true regarding the traditional approach to estimating the fair value of an intangible asset?

• A) The traditional approach requires the use of the risk-free rate of interest.
• B) The traditional approach requires the use of various possible outcomes and their probability of occurrence.
• C) The traditional approach requires the use of judgment in determining a risk-adjusted rate of interest.
• D) The traditional approach requires the assumption that cash flows occur at the beginning of each period (an annuity due).

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Definitions:

Independent Variable

In an experiment or study, the variable that is manipulated or controlled to test its effect on the dependent variable.

Predict

To declare or indicate in advance; especially, to foretell based on observation, experience, or scientific reason.

Variable

A characteristic, number, or quantity that can be measured or quantified and can vary among individuals or over time.

Least Squares Line

A straight line that minimizes the sum of the squared differences between the observed values and the values predicted by the line.