Which of the following statements concerning the methods of valuing a closely held business for federal estate tax purposes is (are) correct?

Which of the following statements concerning the methods of valuing a closely held business for federal estate tax purposes is (are) correct?

l. The capitalization-of-adjusted-earnings method uses a capitalization rate that varies inversely with the degree of risk and rate of return.

II. The adjusted-book value method involves adjusting the asset components of a business to an approximate fair market value for each component.
A . l only
B . II only
C . Both l and ll
D . Neither I nor II

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Answer: C