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Certified Valuation Analyst (CVA)
Examination Practice Exam 2026 | 100
Questions & Answers with Detailed
Rationales | Complete CVA Exam Prep
& Study Guide
1. What is the primary objective of a business valuation?
A. To determine the company's tax liability
B. To estimate the value of a business interest as of a specified date
C. To calculate the company's annual revenue
D. To determine the company's audit fee
Answer: To estimate the value of a business interest as of a specified date
Rationale: A business valuation estimates the value of an ownership interest or
business under specified assumptions, circumstances, and valuation date.
2. Which of the following is most important when defining the valuation
assignment?
A. Office location
B. Purpose and intended use of the valuation
C. Number of employees
D. Company's advertising budget
Answer: Purpose and intended use of the valuation
,Rationale: The purpose and intended use establish the context, scope, standard
of value, and other parameters of the assignment.
3. What does the valuation date represent?
A. The date the valuation report is printed
B. The date the analyst is hired
C. The specific date as of which value is estimated
D. The date financial statements are audited
Answer: The specific date as of which value is estimated
Rationale: Valuation conclusions relate to a particular point in time known as
the valuation date.
4. Which standard of value generally reflects the price between a hypothetical
willing buyer and willing seller?
A. Book value
B. Fair market value
C. Replacement cost
D. Historical cost
Answer: Fair market value
Rationale: Fair market value commonly assumes a hypothetical willing buyer
and willing seller, neither under compulsion and both having reasonable
knowledge of relevant facts.
5. Which valuation approach focuses primarily on expected future economic
benefits?
A. Income approach
B. Cost approach
C. Asset-count approach
D. Historical approach
Answer: Income approach
,Rationale: The income approach converts expected future economic benefits
into a present value using an appropriate discount or capitalization rate.
6. Which valuation approach commonly uses comparable companies?
A. Market approach
B. Cost approach
C. Liquidation approach
D. Historical cost approach
Answer: Market approach
Rationale: The market approach derives value from observed pricing
information for comparable businesses, transactions, or securities.
7. The capitalization of earnings method is most appropriate when:
A. Earnings are expected to be highly unstable
B. Future earnings are expected to be relatively stable
C. The company has no operating history
D. The company is being liquidated immediately
Answer: Future earnings are expected to be relatively stable
Rationale: Capitalization methods are generally most useful when a
representative level of earnings can reasonably be expected to continue.
8. Under a discounted cash flow method, projected cash flows are:
A. Ignored
B. Discounted to their present value
C. Converted directly to book value
D. Added to liabilities
Answer: Discounted to their present value
, Rationale: A discounted cash flow analysis estimates the present value of
expected future cash flows using a rate reflecting risk and the time value of
money.
9. What does the discount rate primarily reflect?
A. Only inflation
B. Risk and the time value of money
C. Only historical earnings
D. The company's tax rate
Answer: Risk and the time value of money
Rationale: The discount rate compensates investors for delaying consumption
and accepting the risks associated with expected future cash flows.
10.What is the terminal value in a DCF analysis?
A. The company's opening cash balance
B. The value attributed to cash flows beyond the explicit forecast period
C. The company's historical cost
D. The amount of current liabilities
Answer: The value attributed to cash flows beyond the explicit forecast period
Rationale: Terminal value captures the estimated value of the business after the
detailed projection period ends.
11.Which formula represents the basic Gordon Growth Model?
A. Value = Earnings × Tax Rate
B. Value = Cash Flow ÷ (Discount Rate − Growth Rate)
C. Value = Assets − Revenue
D. Value = Revenue ÷ Liabilities
Answer: Value = Cash Flow ÷ (Discount Rate − Growth Rate)
Certified Valuation Analyst (CVA)
Examination Practice Exam 2026 | 100
Questions & Answers with Detailed
Rationales | Complete CVA Exam Prep
& Study Guide
1. What is the primary objective of a business valuation?
A. To determine the company's tax liability
B. To estimate the value of a business interest as of a specified date
C. To calculate the company's annual revenue
D. To determine the company's audit fee
Answer: To estimate the value of a business interest as of a specified date
Rationale: A business valuation estimates the value of an ownership interest or
business under specified assumptions, circumstances, and valuation date.
2. Which of the following is most important when defining the valuation
assignment?
A. Office location
B. Purpose and intended use of the valuation
C. Number of employees
D. Company's advertising budget
Answer: Purpose and intended use of the valuation
,Rationale: The purpose and intended use establish the context, scope, standard
of value, and other parameters of the assignment.
3. What does the valuation date represent?
A. The date the valuation report is printed
B. The date the analyst is hired
C. The specific date as of which value is estimated
D. The date financial statements are audited
Answer: The specific date as of which value is estimated
Rationale: Valuation conclusions relate to a particular point in time known as
the valuation date.
4. Which standard of value generally reflects the price between a hypothetical
willing buyer and willing seller?
A. Book value
B. Fair market value
C. Replacement cost
D. Historical cost
Answer: Fair market value
Rationale: Fair market value commonly assumes a hypothetical willing buyer
and willing seller, neither under compulsion and both having reasonable
knowledge of relevant facts.
5. Which valuation approach focuses primarily on expected future economic
benefits?
A. Income approach
B. Cost approach
C. Asset-count approach
D. Historical approach
Answer: Income approach
,Rationale: The income approach converts expected future economic benefits
into a present value using an appropriate discount or capitalization rate.
6. Which valuation approach commonly uses comparable companies?
A. Market approach
B. Cost approach
C. Liquidation approach
D. Historical cost approach
Answer: Market approach
Rationale: The market approach derives value from observed pricing
information for comparable businesses, transactions, or securities.
7. The capitalization of earnings method is most appropriate when:
A. Earnings are expected to be highly unstable
B. Future earnings are expected to be relatively stable
C. The company has no operating history
D. The company is being liquidated immediately
Answer: Future earnings are expected to be relatively stable
Rationale: Capitalization methods are generally most useful when a
representative level of earnings can reasonably be expected to continue.
8. Under a discounted cash flow method, projected cash flows are:
A. Ignored
B. Discounted to their present value
C. Converted directly to book value
D. Added to liabilities
Answer: Discounted to their present value
, Rationale: A discounted cash flow analysis estimates the present value of
expected future cash flows using a rate reflecting risk and the time value of
money.
9. What does the discount rate primarily reflect?
A. Only inflation
B. Risk and the time value of money
C. Only historical earnings
D. The company's tax rate
Answer: Risk and the time value of money
Rationale: The discount rate compensates investors for delaying consumption
and accepting the risks associated with expected future cash flows.
10.What is the terminal value in a DCF analysis?
A. The company's opening cash balance
B. The value attributed to cash flows beyond the explicit forecast period
C. The company's historical cost
D. The amount of current liabilities
Answer: The value attributed to cash flows beyond the explicit forecast period
Rationale: Terminal value captures the estimated value of the business after the
detailed projection period ends.
11.Which formula represents the basic Gordon Growth Model?
A. Value = Earnings × Tax Rate
B. Value = Cash Flow ÷ (Discount Rate − Growth Rate)
C. Value = Assets − Revenue
D. Value = Revenue ÷ Liabilities
Answer: Value = Cash Flow ÷ (Discount Rate − Growth Rate)
