Certified Valuation Analyst (CVA) Practice Exam

What level of value is equivalent to owning stock in a publicly traded company?

1. Marketable Minority Interest

2. Controlling Interest

3. Marketable Majority Interest

4. Minority Marketable Interest

The correct answer is: Minority Marketable Interest

The correct response is associated with the concept of Marketable Minority Interest. This level of value refers to ownership interests in a publicly traded company where the shares can be easily bought and sold in the stock market. In the context of publicly traded companies, owning stock is usually characterized by the ability to sell shares quickly at the market price, providing liquidity to the investor. This is consistent with the definition of a "marketable" interest, which emphasizes the ease of converting ownership into cash. Furthermore, the "minority" aspect indicates that the ownership does not confer control over the company, which aligns with most shareholders of publicly traded companies, as they typically own a fraction of the total shares without the power to dictate corporate decisions. Other concepts like controlling interest or majority interest refer to levels of ownership where the stakeholder has significant influence or control over corporate actions, which is not the case for the typical stockholder scenario in publicly traded companies.