n NISM Certifications
XV NISM Series XV
Medium

Which approach can be used to arrive at the fair value of an asset? Fair valuation is a key concept in finance and accounting, ensuring that assets are valued in a manner consistent with current market conditions and comparable transactions.

Practice question from NISM XV Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    By using the asset’s face value

  2. B

    By calculating the asset’s yearly cash outflows

  3. By comparing it with similar assets in the market

    Correct answer

  4. D

    By taking the market value as the fair value

Why this is the answer

The comparative market approach estimates fair value by analyzing prices of similar assets traded in the market. This ensures valuation reflects current conditions, unlike face value or cash outflows.

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