ASA BV 201 | Questions and Correct Answers | Latest Update 2024/2025 | 100% PASS

ASA BV 201 | Questions and Correct Answers | Latest Update 2024/2025 | 100% PASS Principle of Substitution - Answer -a prudent buyer will pay no more for a property than it would cost to acquire a substitute property with the same utility How is a Fairness Opinion different than a FMV? - Answer -A Fairness Opinion goes further than a FMV by assessing whether a transaction is fair between all ownership entities. It also serves as an insurance policy for the transacting parties. Which two valuation methods are based on the principle of substitution? - Answer -Market and Asset (Cost) What is an "arm's-length" transaction? - Answer -One in which both parties have the ability to negotiate. Why are "rules of thumb" used in valuation? - Answer -When either (a) the rule is highly common in the industry and the most likely buyer would use it, or (b) there is little or no data. This method should only be used as a sanity test. What are the strengths of the Market Approach? - Answer -(a) It is a direct method of valuation when using similar transactions, (b) the data is easily accessible and abundant, (c) includes all assets, and (d)incorporate current market conditions - reflecting investor growth and risk expectations