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NACVA CVA Exam - Topic 3 Question 9 Discussion

The normalized economic income is capitalized, typically, as an annuity in perpetuity. The capitalization rate used in this procedure should be:
A) Commensurate with the risk of investment
B) Consistent with the measurement of net income
C) Debt component and equity component are blended
D) derived from the property over a discrete period of time

NACVA CVA Exam - Topic 3 Question 9 Discussion

Actual exam question for NACVA's CVA exam
Question #: 9
Topic #: 3
[All CVA Questions]

The normalized economic income is capitalized, typically, as an annuity in perpetuity. The capitalization rate used in this procedure should be:

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Suggested Answer: A

by Lonny at May 05, 2022, 06:28 PM

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Alyce
7 months ago
Surprised no one mentioned the importance of market trends!
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Janessa
8 months ago
Wait, D? That seems off, how can you cap it over just a period?
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Wilbert
8 months ago
C sounds right, blending is important.
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Stefanie
8 months ago
I think B makes more sense for consistency.
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Graham
8 months ago
Definitely A, risk is key!
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Ria
8 months ago
I practiced a similar question where the focus was on blending debt and equity components, so I'm leaning towards C, but I could be wrong.
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Jade
8 months ago
I'm not entirely sure, but I feel like the capitalization rate should be consistent with net income measurement, which might point to B.
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Stefany
8 months ago
I remember we discussed how the capitalization rate should reflect the risk of the investment, so I think A makes sense.
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Mertie
8 months ago
I vaguely recall something about deriving the rate over a specific time period, which makes me think D could be relevant, but I’m not confident.
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Noemi
8 months ago
This question seems straightforward, I should be able to identify the two recommended configuration best practices for backup and recovery on Exadata.
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Jolanda
9 months ago
Hmm, this is a tricky one. I'll need to think carefully about the BGP attributes and how they're used in a VPLS setup.
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