Which of the Following Would Be Considered a Level 3

question 3

Multiple Choice

Which of the following would be considered a Level 3 fair value estimate?

• A)The valuation of goodwill obtained from a purchase transaction.
• B)The valuation of a building held for over 20 years.
• C)The valuation of an equity investment traded on the NYSE.
• D)The valuation of a bond investment with a 10 year maturity and an A+ S&P bond rating.

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Definitions:

Consumer Surplus

The difference between the maximum price consumers are willing to pay for a good or service and the actual price they pay.

Producer Surplus

The disparity between the price that producers are ready to accept for a product or service and the price they actually obtain.

Equilibrium Price

The cost where the amount of a product or service consumers want to buy matches the quantity that producers are willing to sell.

Equilibrium Quantity

The amount of goods or services available matches the amount requested at the market price.