Question

Q1.Which one of the following statements is not true? a. Asset-side risk arises from transactions that...


Q1.Which one of the following statements is not true?

a. Asset-side risk arises from transactions that result in a transfer of cash to some other asset, such as the exercise of a loan commitment or a line of credit

b. Liability-side risk arises from transactions whereby shareholders of the financial institution claim cash returns on their equity Investments

c. Liquidity risk occurs because of situations that develop from economic and financial transactions

d. Liquidity risk is reflected on either the asset side of the balance sheet or the liability side of the balance sheet of a financial institution.

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Answer : Option (b) Liability-side risk arises from transactions whereby shareholders of the financial institution claim cash returns on their equity Investments .

Reason :

Liability -side risk arises from transactions where creditor,any other holder of the claim or depositor demands cash for exchange of their claim.Therefore Liability-side risk does not arises from transactions whereby shareholders of the financial institution claim cash returns on their equity Investments. All other statements(a.,b.,c.) are true except Statement (b.)

Add a comment
Know the answer?
Add Answer to:
Q1.Which one of the following statements is not true? a. Asset-side risk arises from transactions that...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • Which of the following statements regarding liquidity risk in correct? Explain why Asset liquidity risk arises...

    Which of the following statements regarding liquidity risk in correct? Explain why Asset liquidity risk arises when a financial institution cannot meet payment obligations. Flight to quality is usually reflected in a decrease in the yield spread between corporate and government debt issuances. Yield spread between on-the-run and off-the-run securities mainly captures the liquidity premium. Funding liquidity risk can be managed by setting limits on certain asset markets or products and by means of diversification.

  • 1. From the lessor's standpoint, which of the following statements regarding leasing is false? a. For...

    1. From the lessor's standpoint, which of the following statements regarding leasing is false? a. For sales-type lease agreements, the lessor earns interest in addition to profit from the transfer of the asset. b. The asset is transferred to the lessee and removed from the books of the lessor. c. The lease provides a method of indirectly making a sale. d. The risk of default is a disadvantage for the lessor. 2. Which is an advantage of leasing from a...

  • All the questions or as many as you have knowledge of for comparison purposes. Thank you....

    All the questions or as many as you have knowledge of for comparison purposes. Thank you. 14. Once a risk occurs a manager has four methods available for dealing with it. Identify and briefly explain each. Which of them would you recommend to your company and why? 15. Explain claim procedures with respect to loss or damage to property or life, indicating what both the insured and the insurer is expected to do in such situations. 16. Explain any four...

  • Inferring Transactions from Financial Statements Costco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics,...

    Inferring Transactions from Financial Statements Costco Wholesale Corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 721locations across the U.S. as well as in Canada, the United Kingdom, Japan, Australia, South Korea, Taiwan, Mexico and Puerto Rico. As of its fiscal year-end 2016, Costco had approximately 86.7 million members. Selected fiscal-year information from the company's balance sheets follows Selected Balance Sheet Data ($ millions) Merchandise inventories Deferred membership income (liability) 2016 $8,969 $8,908 1,362...

  • The following data comes from the 2020 financial statements of the Village of Matthews. Although presented...

    The following data comes from the 2020 financial statements of the Village of Matthews. Although presented in summarized format, the balance sheet debits and credits are equal and the operating statement information is complete. General Fund - Balance Sheet Elements Cash $1,200,000 Short-term Investments 405,000 Property taxes receivable - delinquent 282,000 Due from other funds 58,000 Accounts payable and other accrued liabilities 920,000 Assigned fund balance 90,000 Unassigned fund balance 935,000 General Fund - Operating Statement Elements Revenues, including property...

  • 1. Accounting transactions and financial statements (45 marks) Luxury Moment is a small business selling luxury...

    1. Accounting transactions and financial statements (45 marks) Luxury Moment is a small business selling luxury candles and home fragrance. The balance sheet at the end of December 2019 is shown below. Luxury Moment - Balance Sheet as at 31 December, 2019 Assets Liabilities & Owner's Equity Current Assets: Current Liabilities: Cash $58,150 Accounts Payable $4,600 Accounts Receivable $19,600 Inventory $20,000 Non-current Assets: Non-current Liabilities: Computer - Cost $2,000 Bank Loan $65,000 Less Accumulated ($150) Depreciation Computer - Net $1,850...

  • Please try answering all. P2-3 (Algo) Recording Transactions in T-Accounts, Preparing the Balance Sheet from a...

    Please try answering all. P2-3 (Algo) Recording Transactions in T-Accounts, Preparing the Balance Sheet from a Trial Balance, and Evaluating the Current Ratio LO2-2, 2-4, 2-5 (GL) Jaguar Plastics Company has been operating for three years. At December 31 of last year, the accounting records reflected the following: Cash Investments (short-term) Accounts receivable Inventory Notes receivable (long-term) Equipment Factory building Intangibles $22,000 Accounts payable 3,600 Accrued liabilities payable 4,900 Notes payable (current) 32,000 Notes payable (noncurrent) 1,800 Common stock 43,000...

  • 14. The following accounts and balances were taken from the 2020 financial statements of Global2, Inc....

    14. The following accounts and balances were taken from the 2020 financial statements of Global2, Inc. (in millions). Identify each account as an asset (A), liability (L), stockholder's equity (SE), revenue (R), or an expense (E). Retained Earnings Cost of Goods Sold Selling & Admin Expenses Cash Notes Payable Interest Expense Other Expenses 1,564.7 4,128.5 3,523.6 231.8 513.3 351.5 54.0 Long-term Debt Inventories Net Sales Accounts Payable Common Stock Income Tax Expense 5,619.0 574.5 8,853.3 577.5 103.8 322.1 Prepare an...

  • 1.Accounting transactions and financial statements (40 marks) Bloom Field is a small business selling variety of...

    1.Accounting transactions and financial statements (40 marks) Bloom Field is a small business selling variety of orchids and roses. The balance sheet at the end of December 2019 is shown below. Bloom Field is a small business selling variety of orchids and roses. The balance sheet at the end of December 2019 is shown below. Bloom Field – Balance Sheet as at 31 December, 2019 Assets Liabilities & Owner’s Equity Current Assets: Current Liabilities: Cash                $38,000 Accounts Payable $12,100 Accounts...

  • P2-3 Recording Transactions in T-Accounts, Preparing a Statement of Financial Position from a Trial Balance, and...

    P2-3 Recording Transactions in T-Accounts, Preparing a Statement of Financial Position from a Trial Balance, and Evaluating the Current Ratio LO2-4, 2-6 Injection Plastics Company has been operating for three years. At December 31, 2020, the accounting records reflected the following: Cash Investments (short-term) Accounts receivable Inventories Notes receivable (long-term) Equipment Factory building $23,500 2,500 3,500 26,500 1,500 50,500 92,500 Intangibles Accounts payable Accrued liabilities Short-term borrowings Notes payable (long-term) Contributed capital Retained earnings $ 3,500 15,500 2,500 7,500 50,500...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT