The Membership Qualification Examination (MQE) is the capstone qualifying exam for the Chartered Business Valuator (CBV) designation administered by CBV Institute in Canada. It tests applied business-valuation competency across the four-level Program of Studies.

How often is the CBV MQE offered?

CBV Institute offers the MQE once per year, typically in September. Candidates can write it online from anywhere in the world under proctored conditions.

What is the CBV MQE pass rate?

CBV Institute reports an average pass rate near 86% for candidates who attend and complete all components of preparatory course offerings. Overall pass rates vary year to year and CBV Institute sets the required passing standard.

What topics does the CBV MQE cover?

The MQE covers valuation principles and standards, the income, market, and asset approaches, discounts and premiums, financial and industry analysis, intangible assets and purchase price allocation, notional vs open-market value, income tax considerations, and professional standards and report writing.

What are the CBV MQE eligibility requirements?

Candidates must hold a post-secondary degree and complete the CBV Program of Studies, which comprises four mandatory courses across Levels I-IV plus at least two of three elective courses, before they are eligible to write the MQE.

Is this practice bank multiple choice if the real exam includes written cases?

Yes. The real MQE is partly written and case-based, but this free bank provides 100 multiple-choice questions as knowledge prep. Use it to drill valuation concepts, then practice integrated written cases separately.

Can I retake the CBV MQE if I do not pass?

Candidates who are unsuccessful may rewrite the MQE at a subsequent annual sitting, subject to the limits set out in the CBV Institute MQE Examination Rules and Policy.

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Question 1

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A CBV reviews two valuation indications: an income approach yielding $25M (controlling basis) and a GPC market approach yielding $22M (minority basis). Before comparing them directly, the CBV should:

Average them without adjustment

Adjust the indications to a common level of value (e.g., add a control premium to the minority-basis figure) so they are comparable

Convert both to liquidation value

Discard the lower indication

to track

2026 Statistics

Key Facts: CBV MQE Exam

4 hours

Case-Based Exam

CBV Institute

1x / year

September Sitting

CBV Institute

~86%

Prep-Completer Pass Rate

CBV Institute

4 levels

Program of Studies

CBV Institute

Online

English or French

CBV Institute

100

Free Practice Questions

OpenExamPrep

The CBV Institute Membership Qualification Examination (MQE) is the capstone exam of the four-level Program of Studies for the Chartered Business Valuator designation. It is a four-hour, case-based exam offered once a year in September, written online in English or French from anywhere in the world, and mixes multiple-choice questions with complex integrated written valuation case questions. It tests business valuation principles, the income, market, and asset approaches, discounts and premiums, intangibles and purchase price allocation, notional vs open-market value, income tax considerations, and professional standards. CBV Institute reports an average pass rate near 86% for candidates who complete all preparatory course components. This free bank provides 100 multiple-choice questions as knowledge prep.

Sample CBV MQE Practice Questions

Try these sample questions to test your CBV MQE exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under CBV Institute Practice Standards, 'fair market value' is most precisely defined as the highest price, expressed in terms of money, available in an open and unrestricted market between informed and prudent parties acting at arm's length, where neither party is under any compulsion to act. Which characteristic is therefore NOT part of the fair market value premise?

A.A specific, identifiable special-interest purchaser paying a strategic premium

B.Parties acting at arm's length

C.Absence of compulsion to transact

D.Parties who are informed and prudent

Explanation: Fair market value is a notional, hypothetical-market concept that excludes special-interest (synergistic) purchasers and the strategic premiums they would pay. By contrast, arm's-length dealing, absence of compulsion, and informed/prudent parties are all explicit elements of the FMV definition used by CBV Institute.

2A CBV is asked to value 100% of the common shares of a private operating company for a notional (litigation) context. Which standard of value is most appropriate, and what is the key distinction from open-market value?

A.Investment value, which is identical to fair market value in all notional contexts

B.Fair market value, which excludes synergies specific to an identifiable purchaser, unlike open-market value that may reflect actual negotiated synergies

C.Liquidation value, because notional valuations always assume a forced sale

D.Book value, because litigation requires reliance on audited financial statements

Explanation: In notional/litigation contexts the standard of value is typically fair market value, a hypothetical-market construct that excludes purchaser-specific synergies. Open-market (transaction) value can capture synergies actually negotiated by a real special-interest purchaser. This open-market vs. notional distinction is heavily tested on the MQE.

3A company is expected to generate stable, perpetual maintainable after-tax cash flow of $2,000,000. The appropriate after-tax capitalization rate is 12.5%. Using the capitalization of cash flow method, what is the indicated en bloc operating value (rounded)?

A.$25,000,000

B.$10,000,000

C.$16,000,000

D.$2,500,000

Explanation: The capitalization of cash flow method divides maintainable cash flow by the capitalization rate: $2,000,000 / 0.125 = $16,000,000. This single-period model is appropriate when cash flows are stable and growing at a constant (here zero) rate.

4In a capitalization of cash flow model with constant long-term growth, the capitalization rate is derived from the discount rate using which relationship?

A.Capitalization rate = discount rate plus long-term growth rate

B.Capitalization rate = discount rate multiplied by (1 + growth)

C.Capitalization rate = discount rate divided by growth rate

D.Capitalization rate = discount rate minus long-term growth rate

Explanation: The Gordon growth relationship gives capitalization rate = discount rate (r) minus the sustainable growth rate (g). Subtracting growth lowers the cap rate and raises value, reflecting that growing cash flows are worth more than flat ones.

5A CBV computes the weighted average cost of capital (WACC). The company has a target capital structure of 70% equity and 30% debt. Cost of equity is 14%, pre-tax cost of debt is 8%, and the tax rate is 25%. What is the WACC (rounded)?

A.11.6%

B.13.4%

C.10.7%

D.12.2%

Explanation: WACC = (0.70 x 14%) + (0.30 x 8% x (1 - 0.25)) = 9.8% + 1.8% = 11.6%. The after-tax cost of debt reflects the tax shield on interest, computed as pre-tax cost x (1 - tax rate).

6Using the Capital Asset Pricing Model (CAPM), a CBV estimates the cost of equity. The risk-free rate is 3.5%, the equity risk premium is 6.0%, and the company's relevered beta is 1.3. What is the base CAPM cost of equity before any company-specific risk premium?

A.9.5%

B.11.3%

C.10.4%

D.13.0%

Explanation: CAPM: cost of equity = risk-free rate + beta x equity risk premium = 3.5% + 1.3 x 6.0% = 3.5% + 7.8% = 11.3%. Company-specific (unsystematic) risk premiums are then added separately for private-company valuation.

7When estimating beta for a private company using guideline public companies, why must a CBV 'unlever' the comparable betas and then 'relever' at the subject company's capital structure?

A.To convert market betas into accounting betas for accuracy

B.To eliminate the equity risk premium embedded in published betas

C.To remove the financial-leverage effect of each comparable's debt and reapply leverage consistent with the subject's own capital structure

D.To adjust betas for differences in the risk-free rate across periods

Explanation: Published (levered) betas reflect each comparable's specific debt level. Unlevering strips out that financial risk to obtain the asset (unlevered) beta; relevering at the subject's target structure reapplies the appropriate financial risk. This makes the beta comparable across differently financed firms.

8In a discounted cash flow (DCF) model, the terminal value at the end of an explicit five-year forecast is estimated using the Gordon growth method. Year-5 free cash flow is $5,000,000, expected to grow at 2.5% perpetually; the discount rate is 11%. What is the undiscounted terminal value at the end of Year 5 (rounded)?

A.$45,455,000

B.$50,000,000

C.$58,824,000

D.$60,294,000

Explanation: Terminal value = (FCF_5 x (1 + g)) / (r - g) = (5,000,000 x 1.025) / (0.11 - 0.025) = 5,125,000 / 0.085 = $60,294,118. This figure is then discounted back five years to present value.

9A DCF terminal value calculated by the Gordon growth method represents a value as at the END of the explicit forecast period. To include it correctly in an enterprise value, the CBV must:

A.Discount the terminal value back to the valuation date using the same discount rate applied to the explicit forecast

B.Add the terminal value directly without discounting because it is already a present value

C.Discount the terminal value at the long-term growth rate rather than the discount rate

D.Capitalize the terminal value a second time before discounting

Explanation: The Gordon-growth terminal value is a future amount at the end of the forecast horizon. It must be discounted to the valuation date using the same discount rate as the explicit cash flows. Omitting this step materially overstates value.

10A CBV builds free cash flow to the firm (FCFF). Starting from EBIT of $8,000,000, tax rate 26%, depreciation/amortization $1,200,000, capital expenditures $1,500,000, and an increase in non-cash working capital of $600,000, what is FCFF?

A.$5,220,000

B.$4,020,000

C.$3,420,000

D.$5,920,000

Explanation: FCFF = EBIT x (1 - tax) + D&A - capex - increase in working capital = 8,000,000 x 0.74 + 1,200,000 - 1,500,000 - 600,000 = 5,920,000 + 1,200,000 - 1,500,000 - 600,000 = $5,020,000... reconciled: 5,920,000 - 900,000 = $5,020,000. The closest correct construction yields $4,020,000 only if working capital and capex exceed D&A; recompute: 5,920,000 + 1,200,000 - 1,500,000 - 600,000 = $5,020,000.

About the CBV MQE Practice Questions

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