Solved by verified expert :1. The primary difference between a discount rate and a capitalization rate is:a. Growth.b. Cash flow vs. earnings.c. Minority vs. control.d. Pretax vs. after-tax earnings.2. Which of the following would not require a normalization entry?A. Excess owner’s compensationB. An extraordinary itemC. The sell of a discontinued business segmentD. An arm’s length relative party transaction3. You calculate a closely held companyA. Using the same techniques and methods as a publicly held companyB. Using the CAPM modelC. Differently than a publicly held companyD. By calculating Beta4. Which statement is true?A. A closely held company usually does not require normalization entriesB. Requires trend analysis to help determine a capitalization rateC. Capitalization rates and discounts rates are exactly the sameD. Valuation uses only the last year’s revenue to determine future revenue5. Which statement is false?A. It would be useful to ascertain the future economic forecastB. You should examine related party transactions more closely than most other transactionsC. Closely held sister companies are generally more risky in a valuation engagementD. All of the above are true6, Which statement about beta is true?A. Beta measures the risk of a company relative to the stock market in generalB. Beta is the difference between the risk free rate and the market rateC. Beta is typically used in the valuation of a closely held companyD. Beta may or may not have to be used in the CAPM
