SOFE Exam AFE Topic 1 Question 84 Discussion

Actual exam question for SOFE's AFE exam

Question #: 84
Topic #: 1

[All AFE Questions]

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?

AEconomic flow

BNominal flows

CDiscount rates

DInflation effect

Show Suggested Answer

Suggested Answer: C

by Princess at Sep 07, 2024, 11:03 PM

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Tawna

6 months ago

D) Inflation effect is the way to go. Otherwise, you might as well just use Monopoly money. *laughs*

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Kristian

5 months ago

D) Inflation effect is definitely a key factor to keep in mind for accurate cash flow analysis.

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Milly

5 months ago

C) Discount rates play a crucial role in avoiding double counting or omitting risk factors.

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Nettie

5 months ago

A) Economic flow is also important to consider when reflecting assumptions in cash flows.

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Paulene

6 months ago

I'm going with C) Discount rates. Gotta love these finance questions that make you think! *chuckles*

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Virgina

6 months ago

Hmm, this is a tricky one. I'm leaning towards A) Economic flow, but I'm not 100% sure.

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Aleta

4 months ago

I'm not sure, but I think it might be B) Nominal flows.

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Benton

4 months ago

I believe it's A) Economic flow.

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Laura

5 months ago

I would go with D) Inflation effect.

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Val

5 months ago

I think it's C) Discount rates.

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Art

6 months ago

That's a good point, Jerry. Economic flow could also play a role in avoiding double counting.

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Lera

6 months ago

B) Nominal flows makes the most sense to me. Adjusting the cash flows for inflation would ensure the assumptions are consistent.

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Teddy

5 months ago

B) Nominal flows are indeed important for adjusting cash flows to reflect consistent assumptions.

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Casie

5 months ago

D) Inflation effect should definitely be taken into account to avoid double counting or omitting risk factors.

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Peter

5 months ago

C) Discount rates play a crucial role in ensuring the assumptions are consistent with the cash flows.

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Donette

6 months ago

A) Economic flow would also be important to consider when reflecting assumptions in cash flows.

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Jerry

6 months ago

I believe it could also be A) Economic flow, as it considers the overall economic conditions.

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Evangelina

6 months ago

D) Inflation effect seems like the right choice here. The cash flows should account for the impact of inflation to get an accurate valuation.

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Delmy

6 months ago

D) Inflation effect is important to consider for accurate valuation.

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Lelia

6 months ago

C) Discount rates play a crucial role in reflecting assumptions consistent with cash flows.

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Dottie

6 months ago

I agree with Art, because discount rates help in reflecting the risks factors accurately.

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Art

7 months ago

I think the answer is C) Discount rates.

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Annamae

7 months ago

I think the correct answer is C) Discount rates. The discount rates used should reflect the Annamaee assumptions as the cash flows to avoid double counting or omitting risk factors.

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