Valuation Technique for Measuring Fair Value

D

The correct answer is A. Market, income and risk approach.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation technique used to measure fair value should be appropriate for the asset or liability being measured and should maximize the use of observable inputs and minimize the use of unobservable inputs.

The market approach is one of the three main approaches used to determine fair value. This approach uses prices and other relevant information from market transactions involving identical or comparable assets or liabilities. The market approach is particularly useful when there is an active market for the asset or liability being measured.

The income approach is another of the three main approaches used to determine fair value. This approach uses the present value of expected future cash flows to determine the fair value of an asset or liability. The income approach is particularly useful when there is no active market for the asset or liability being measured.

The risk approach is the third main approach used to determine fair value. This approach adjusts the value determined using either the market or income approach to reflect the risk associated with the asset or liability being measured. The risk approach is particularly useful when the asset or liability being measured has unique or unusual risks.

Therefore, the correct answer is A. Market, income and risk approach, since it includes the three main approaches that should be used to measure fair value, depending on the circumstances of the asset or liability being measured.