If a portfolio manager had to estimate the fair value of investments in timber,which of the following would he/she most likely identify as the level of inputs to determine this?
A) Level 1.
B) Levels 1 and 2.
C) Levels 2 or 3.
D) All levels would be applicable.

Question

Quizplus · Accepted Answer

The most appropriate level of inputs to determine the fair value of investments in timber is Levels 2 or 3. Level 1 inputs refer to quoted prices in active markets for identical assets, which may not be readily available in the case of investments in timber. Level 2 inputs are observable market data for similar assets or inputs derived from observable market data. Level 3 inputs are unobservable inputs and rely on management's assumptions and estimates, which may be more applicable in the case of timber investments. Therefore, Levels 2 or 3 would be most relevant in estimating the fair value of investments in timber.

If a Portfolio Manager Had to Estimate the Fair Value