In Order to Measure Fair Value Under IFRS13, an Entity

question 9

Multiple Choice

In order to measure fair value under IFRS13, an entity must determine

• A) the item being measured, and how the item could or would be used.
• B) the market the item would be (or is) bought and sold in.
• C) which fair value model is being used to value the item.
• D) all of the above

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Definitions:

Real Rate of Return

The yearly rate of return on an investment, corrected for price changes stemming from inflation or external factors.

Annual Interest Rate

The percentage of the principal that is paid as interest to the lender over the course of one year, not accounting for compounding.

Value at Risk (VaR)

Measure of downside risk. The loss that will be incurred in the event of an extreme adverse price change with some given, typically low, probability.

Standard Deviation

A statistical measurement that sheds light on historical volatility.