SOFE afe practice test

Accredited Financial iner Exam


Question 1

What is made on an instrument-by-instrument basis, generally when an instrument is initially
recognized in the financial statements?

  • A. Election
  • B. Disclosure
  • C. Eligibility
  • D. Discount
Answer:

A

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Question 2

Fair quoted techniques used to measure fair value should maximize the use of observable inputs and
minimize the use of unobservable inputs.

  • A. True
  • B. False
Answer:

B

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Question 3

What technique uses a risk-adjusted discount rate and contractual, promised, or most likely cash
flows?

  • A. Asset/Liability weighted
  • B. Fair value
  • C. Present value
  • D. Discount rate adjustment
Answer:

D

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Question 4

To avoid double counting or omitting the effects of risks factors what should reflect assumptions that
are consistent with those inherent in the cash flows?

  • A. Economic flow
  • B. Nominal flows
  • C. Discount rates
  • D. Inflation effect
Answer:

C

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Question 5

A change in _______ or its application is appropriate if the change results in a measurement that is
equally or more representative of fair value in the circumstances.

  • A. Valuation technique
  • B. Value technique
  • C. Investment approach
  • D. Accounting corrections
Answer:

A

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Question 6

The amount that currently would be required to replace the service capacity of an asset is called:

  • A. Risk approach
  • B. Market approach
  • C. Income approach
  • D. Cost approach
Answer:

D

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Question 7

What uses valuation techniques to convert future amounts to a single present amount?

  • A. Risk approach
  • B. Market approach
  • C. Income approach
  • D. Cost approach
Answer:

C

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Question 8

Valuation technique should be used to measure fair value and is consistent with:

  • A. market, income and risk approach
  • B. market, performance and cost approach
  • C. security, income and risk approach
  • D. market, income and cost approach
Answer:

D

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Question 9

The risk that the obligation will not be fulfilled and affects the value at which the liability is
transferred is known as:

  • A. performance risk
  • B. nonperformance risk
  • C. hypothetical risk
  • D. relocation risk
Answer:

B

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Question 10

The highest and best use of the asset is ______________, if the asset would provide maximum value
to market participants principally on the standalone basis.

  • A. in-exchange
  • B. in-use
  • C. in-market
  • D. in-sale
Answer:

A

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