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NACVA Exam CVA Topic 1 Question 76 Discussion

Actual exam question for NACVA's CVA exam
Question #: 76
Topic #: 1
[All CVA Questions]

The state of the art in the twenty-first century involves incorporating one or all of the following elements into the discount rate to reflect risk EXCEPT:

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Suggested Answer: D

by Portia at Nov 27, 2023, 03:21 AM

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Huey
1 months ago
The correct answer is D. None of these. All the options presented are standard elements that should be incorporated into the discount rate to reflect risk.
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Willodean
4 days ago
No, I believe it's B) One or more coefficients modifying the basic equity risk premium based on industry or other characteristics.
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Vivienne
13 days ago
I think it's A) A basic equity risk premium over the risk-free rate selected as the base.
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Helaine
1 months ago
I'm stumped on this one. Maybe I should have paid more attention in my finance class instead of doodling discount rate formulas on my notebook.
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Lindsey
2 days ago
C) An element reflecting the size effect
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Tasia
3 days ago
B) One or more coefficients modifying the basic equity risk premium based on industry or other characteristics that are expected to affect the degree of risk for the subject investment
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Slyvia
7 days ago
A) A basic equity risk premium over the risk --free rate selected as the base
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Jesusita
1 months ago
Haha, I'm just going to guess C. The size effect, because who doesn't love a little size in their discount rate? Am I right or am I right?
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Carlee
16 days ago
C) An element reflecting the size effect
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Aileen
1 months ago
B) One or more coefficients modifying the basic equity risk premium based on industry or other characteristics that are expected to affect the degree of risk for the subject investment
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Cheryl
1 months ago
A) A basic equity risk premium over the risk --free rate selected as the base
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Elvera
2 months ago
I disagree, I think the answer is B. Modifying the equity risk premium based on industry characteristics is a key way to account for different levels of risk.
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Silva
14 days ago
User 3: I disagree, I think the answer is D. None of these elements should be excluded.
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Colton
23 days ago
User 2: I agree with Colton. A basic equity risk premium is a key element.
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Eva
1 months ago
User 1: I think the answer is A. A basic equity risk premium is essential.
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Jamika
2 months ago
I'm not sure, but I think D) None of these makes sense because the question is asking for an exception.
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Zachary
2 months ago
I'm pretty sure the correct answer is D. None of these. The question is asking for what SHOULD NOT be included in the discount rate, and all the other options seem to be standard elements that would be incorporated to reflect risk.
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Carylon
22 days ago
Yes, I think you're right. The other options all make sense in terms of incorporating risk into the discount rate.
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Corrina
23 days ago
I agree, D. None of these seems to be the correct answer.
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Alisha
24 days ago
Yes, I think you're right. The other options all make sense in terms of incorporating risk into the discount rate.
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Laurel
1 months ago
Definitely, risk is a key factor in determining the appropriate discount rate for an investment.
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Jesusita
1 months ago
It's always important to consider risk when calculating the discount rate.
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Adelina
1 months ago
I agree, D. None of these seems to be the correct answer.
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Louis
1 months ago
Yeah, I agree. A), B), and C) all make sense to include in the discount rate.
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Sonia
2 months ago
I think you're right, D) None of these seems to be the correct answer.
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Desmond
2 months ago
I agree with Georgiana, because all the other options involve incorporating elements to reflect risk.
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Georgiana
3 months ago
I think the answer is D) None of these.
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