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IFPUG ABV Exam Syllabus Topics:

SectionWeightObjectives
Topic 1: Quantitative Analysis and Financial Statement Analysis20–25%- Industry and economic analysis
- Financial statement adjustment and analysis
- Risk and return analysis
- Statistical and quantitative methods
Topic 2: Valuation Adjustments and Special Topics15–20%- Valuation of debt and equity securities
- Tax considerations
- Valuation of intangible assets
- Discounts and premiums
Topic 3: Valuation Approaches and Methods30–35%- Asset-based approach
  • 1. Net asset value methods
    • 2. Adjusted book value
      - Market approach
      • 1. Guideline public company method
        • 2. Guideline transaction method
          - Income approach
          • 1. Discounted cash flow methods
            • 2. Capitalization of earnings
              Topic 4: Professional Responsibilities and Valuation Standards15–20%- Legal and regulatory considerations
              - Valuation standards and guidelines
              - Professional ethics and conduct
              Topic 5: Valuation Applications and Reporting15–20%- Valuation report preparation and content
              - Litigation and dispute support
              - Business ownership transactions
              - Valuation for financial reporting

              IFPUG Accredited in Business Valuation (ABV) Sample Questions:

              1. Under the asset approach, the value of the corporation's investment in common stock is the common stock's fair market value on the valuation date:

              A) Plus the potential income taxes payable on the sale of this stock
              B) Less the potential income taxes payable to hedge the stock
              C) Less the potential income taxes payable on short selling
              D) Less the potential income taxes payable on the sale of this stock


              2. About half the state and many individual companies have statutes or articles that require a super majority to effect certain corporate actions. If the minority block is of sufficient size to block such actions, there may be cause to reduce the discount for lack of control. In most cases, this would not be grounds for a sight reduction in the discount. Which of the following term is related to this scenario?

              A) Takeover
              B) Swing vote
              C) "Coattail" protection
              D) Blocking power


              3. The fundamental of CAPM is:

              A) That the risk premium portion of the expected return on a security is a function of that security's systematic risk.
              B) That the risk premium portion of the expected return on a security is a function of that security's unsystematic risk.
              C) That the risk discount portion of the expected return on a security is a function of that security's unsystematic risk.
              D) That the risk discount portion of the expected return on a security is a function of that security's systematic risk.


              4. Which of the following are the risk measures and their correlation coefficients with observed equity risk premiums?

              A) Coefficient of variation of return on book value of equity
              B) Operating margin
              C) All of the above
              D) Coefficient of variation of operating margin


              5. Most valuation analysts prefer
              as a measure of central tendency.

              A) Standard
              B) Nucleus
              C) Mean
              D) Median


              Solutions:

              Question # 1
              Answer: D
              Question # 2
              Answer: D
              Question # 3
              Answer: A
              Question # 4
              Answer: C
              Question # 5
              Answer: D

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