Certified Valuation Analyst (CVA) Practice Exam

Is it true that valuators need only explain the approaches they used in their reports, excluding opposing side's approaches?

1. True

2. False

3. Depends on the case

4. Not specified

The correct answer is: False

Valuators must provide a comprehensive understanding in their reports, which includes not only the approaches they used but also a fair discussion of opposing approaches. This practice ensures transparency and allows stakeholders to assess the rationale and reasonableness of the selected methods. By addressing opposing approaches, valuators demonstrate a complete view of the valuation landscape, acknowledge alternative perspectives, and strengthen the credibility of their conclusions. This thoroughness is particularly important in contentious situations or when the valuation may be subject to scrutiny in litigation or negotiation contexts. Thus, the assertion that valuators only need to explain their chosen methodologies, without reference to opposing ones, is incorrect. A well-rounded valuation report should facilitate informed decision-making by providing a clear picture of differing methodologies and their implications.