CFA Level II Vignettes Equity Analysis Private Companies MCQs Test 3

Practice CFA 2026 Level II Vignettes Equity Analysis MCQs from Private Companies. Get instant results with Explanation.

Practice Quiz 3 for "Private Companies" (Equity Analysis). Total 30 MCQs available, split into 3 quizzes. Challenge yourself with advanced application-based questions. Mastering these concepts is essential for securing a high percentile in CFA.

General10 MCQs

1. Vignette 5: Private Companies - Case Study: An analyst is valuing a private company with significant intangible assets. How are intangibles typically valued?

A. Intangibles are not valued separately for private companiesB. Intangibles are always valued using the cost approachC. Intangibles are valued using only the market approachD. Intangibles can be valued using income, market, or cost approaches

2. What is the excess earnings method for intangible valuation?

A. Excess earnings method isolates earnings from intangibles after charging returns on tangible assetsB. Excess earnings method uses a market multipleC. Excess earnings method is the same as the cost approachD. Excess earnings method is only used for goodwill

3. What is the relief‑from‑royalty method?

A. Relief‑from‑royalty method values intangibles based on replacement costB. Relief‑from‑royalty method values intangibles based on estimated royalties avoidedC. Relief‑from‑royalty method uses the cost approachD. Relief‑from‑royalty method is only for customer contracts

4. What is the multi‑period excess earnings method (MPEEM)?

A. MPEEM is a single‑period modelB. MPEEM is the same as the relief‑from‑royalty methodC. MPEEM projects excess earnings over multiple periods and discounts themD. MPEEM is not used for intangibles

5. What is goodwill and how is it treated in valuation?

A. Goodwill is amortized over 40 yearsB. Goodwill is the same as an identifiable intangibleC. Goodwill is not tested for impairmentD. Goodwill is the residual value after valuing identifiable assets in a business combination

General10 MCQs

6. Vignette 6: Private Companies - Case Study: An analyst is valuing a private company for estate planning. What are the common purposes of private company valuation and how do they affect the valuation?

A. Private company valuation is only for M&AB. Private company valuation is used for various purposes, including estate planning, litigation, and buy‑sell agreementsC. Private company valuation is never used for tax purposesD. Private company valuation is only for financial reporting

7. What are the different standards of value and their applications?

A. The standard of value is the same for all purposesB. Fair market value is only used for public companiesC. Different standards of value apply depending on the purpose of the valuationD. Investment value is the same as fair market value

8. What is the role of judgment in private company valuation?

A. Private company valuation requires significant judgment and empirical support for assumptionsB. Private company valuation is purely mechanicalC. Private company valuation does not require a reportD. Private company valuation is always straightforward

9. What are the practical challenges in private company valuation?

A. Private companies have perfect financial dataB. Private companies always have market comparablesC. Private companies do not require adjustmentsD. Lack of data is a challenge, and owner‑related adjustments are often needed

10. How should a complex capital structure be handled in private company valuation?

A. Private companies have simple capital structuresB. Complex capital structures may require allocation of value to different securitiesC. Preferred stock is always valued at parD. Options are ignored in private company valuation

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Conducting Body: CFA Institute

Frequency: 4 times a year (February, May, August, November) | Time: 70 Minutes

Negative Marking: No

⚡ Test Pattern (Total: 90 MCQs):

Subject breakdown not available.

Merit Formula: -

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CFA Level II Vignettes Equity Analysis Private Companies MCQs Test 3

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