Which of the Following Information Must Be Provided in the Financial

question 5

Multiple Choice

Which of the following information must be provided in the financial report about level 3 fair valuations

• A) A description of the valuation technique used
• B) If the asset is not being used for its highest and best use why this is the case
• C) Quantitative information on the inputs used in the model
• D) All of the above

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Definitions:

Sensitivity Analysis

A technique used to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Market Risk

The risk of financial loss due to factors that affect the entire market or economy, such as changes in interest rates, inflation, and recessions.

Simulation Analysis

Simulation analysis involves using a model to estimate how uncertain variables in a financial or project plan might affect outcomes, helping in assessing risk and making decisions.

Risk-adjusted Discount Rate

A discount rate that has been altered to account for the risk of the cash flows, used in capital budgeting to reflect the project's risk.